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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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