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for an accountant's pay, he found that the corporation did not
have excess earnings or earnings over and above a return on
tangible assets. Consequently, petitioners' expert concluded
that the corporation was worth the value of its tangible assets5
and that there was no intangible or goodwill value at the time of
the distribution to the shareholders. He then addressed the
valuation of the corporation's client list. Recognizing that in
a service-related business the client relationship is normally
between the client and the professional who services that client,
petitioners' expert concluded that "Without an effective non-
competition agreement, the clients have no meaningful value."
Recognizing that there was no restriction on the ability of the
individual accountants to compete with the corporation, he
concluded that the client-related goodwill and intangibles
belonged to the professional accountants (individually) who
serviced the clients and that a list of these clients had no
material value.
We have held that there is no salable goodwill where, as
here, the business of a corporation is dependent upon its key
employees, unless they enter into a covenant not to compete with
the corporation or other agreement whereby their personal
relationships with clients become property of the corporation.
5Petitioners' expert expressed no opinion with respect to
the value of the tangible assets of the corporation.
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