William Norwalk, Transferee, et al. - Page 15

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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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