William Norwalk, Transferee, et al. - Page 19

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               one witness put it, "Mr. MacDonald was the Company."                   
               The policy of the corporation was decided by D. K.                     
               MacDonald and all employees worked under his direction                 
               and supervision.  There existed no contract between the                
               corporation and any of its employees, including D. K.                  
               MacDonald, with respect to future services.  Neither                   
               the name of the corporation, its location, its agency                  
               agreements, nor its existing policies with customers                   
               had any value.  If the law prevents the recognition of                 
               the personal ability and personality of D. K. MacDonald                
               as an element of this corporation's goodwill for income                
               tax purposes, then petitioners did not receive any                     
               goodwill as a result of their acquisition of this                      
               corporation's assets.                                                  
                    We find no authority which holds that an                          
               individual's personal ability is part of the assets of                 
               a corporation by which he is employed where, as in the                 
               instant cases, the corporation does not have a right by                
               contract or otherwise to the future services of that                   
               individual.  * * *  [MacDonald v. Commissioner, 3 T.C.                 
               at 727.]                                                               

               We further held in MacDonald that there was no marketable              
          asset embodying the goodwill of the corporation which could be              
          sold to a third party.  We recognized the possibility that a                
          purchaser might take over the customer list of the corporation on           
          a contingency basis.  In holding that this type of an arrangement           
          has no fair market value, we stated:                                        
               It is true that goodwill may be the subject of                         
               exchange.  Here, however, Cassatt and Company [the                     
               seller] did not undertake to transfer its goodwill to                  
               Pierce [the purchaser] in exchange for property of an                  
               ascertainable market value.  On the contrary the                       
               transfer was made in consideration of Pierce's promise                 
               to share with Cassatt and Company for six years in the                 
               future any commissions which it might earn during that                 
               period from business with Cassatt customers.  The                      
               receipt of such commissions was wholly contingent upon                 
               Pierce's remaining in business and obtaining business                  
               from the former Cassatt customers, neither of which it                 

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