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In determining the value of goodwill, there is no specific rule,
and each case must be considered and decided in light of its own
particular facts. MacDonald v. Commissioner, 3 T.C. 720, 726
(1944). Moreover, in determining such value it is well
established that the earning power of the business is an
important factor. Estate of Krafft v. Commissioner, T.C. Memo.
1961-305. In Staab v. Commissioner, 20 T.C. 834, 840 (1953), we
stated:
Goodwill, then, is an intangible consisting of the
excess earning power of a business. A normal earning
power is expected of the business assets, and if the
business has greater earnings, then the business may be
said to have goodwill. This excess in earning power
may be due to any one or more of several reasons, and
usually this extra value exists only because the
business is a going concern, being successful and
profitable. Goodwill may arise from: (1) the mere
assembly of the various elements of a business,
workers, customers, etc., (2) good reputation,
customers' buying habits, (3) list of customers and
their needs, (4) brand name, (5) secret processes, and
(6) other intangibles affecting earnings.
Both parties presented testimony from expert witnesses
regarding the value of the corporation's intangible assets. In
appraising the value of the corporation's intangibles,
petitioners' expert stated: "Intangible value within a company
(or goodwill value) is based upon the existence of excess
earnings." After examining financial information from the
corporation's Federal income tax returns, the pay history of
Messrs. DeMarta and Norwalk, and Federal Government guidelines
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