William Norwalk, Transferee, et al. - Page 17

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          Martin Ice Cream Co. v. Commissioner, 110 T.C. 189, 207 (1998)              
          ("personal relationships of a shareholder-employee are not                  
          corporate assets when the employee has no employment contract               
          with the corporation"); Estate of Taracido v. Commissioner, 72              
          T.C. 1014, 1023-1024 (1979); Cullen v. Commissioner, 14 T.C. 368,           
          372 (1950); MacDonald v. Commissioner, supra at 727; cf.                    
          Schilbach v. Commissioner, T.C. Memo. 1991-556.6                            
               We have no doubt that most, if not all, of the clients of              
          the corporation would have "followed" the accountant who serviced           
          that client if the accountant would have left the corporation.              
          For instance, when Mr. Tang and Ms. Hagan left the partnership              
          shortly after the corporation was liquidated, at least 92 clients           
          engaged these former employees to provide future services.  On              
          the record here, it is reasonable to assume that the personal               
          ability, personality, and reputation of the individual                      
          accountants are what the clients sought.  These characteristics             
          did not belong to the corporation as intangible assets, since the           

               6In support of his position, respondent cites Schilbach v.             
          Commissioner, T.C. Memo. 1991-556.  In Schilbach, we found that a           
          medical practice, operating as a corporation, had goodwill                  
          despite the lack of a covenant not to compete.  Schilbach is                
          distinguishable from the instant case in that in Schilbach some             
          of the goodwill of the medical practice was inherent in the                 
          operating entity and was not solely dependent upon the employee-            
          shareholder's ability.  Moreover, in Schilbach, we found it                 
          doubtful that the employee-shareholder would have competed with             
          the medical practice due to his inability to obtain malpractice             
          insurance and his physical and mental condition.  We do not find            
          that the same circumstances exist in the instant cases.                     

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