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Jasiak knew the auto parts business well and that he started
another auto parts store in 1975, which was open for about 1-1/2
years, shows that the covenant not to compete had value.
Petitioners contend that the value of the covenant not to compete
is $175,000 less the book value of Cost Less which petitioners
contend is $10,000.
We disagree. We believe Jasiak's oral promise to Cost Less
not to compete had little or no value. The fact that Jasiak
opened another auto parts store in 1975, which was open 1-1/2
years, does little to show he was a competitive threat to Cost
Less when he wanted to retire in 1986. The auto parts business
was highly competitive. It is not clear whether his oral promise
included a specific duration or geographic area. His oral
promise provided for no consideration. Thus, it may not have
been enforceable. See Amex Distrib. Co. v. Mascari, 724 P.2d
596, 601 (Ariz. Ct. App. 1986); American Credit Bureau, Inc. v.
Carter, 462 P.2d 838, 840 (Ariz. Ct. App. 1969).
If we knew the fair market value of Jasiak's Cost Less
stock, and we knew that the $175,000 payment was intended to be
made for both the stock and a covenant not to compete, then, as
petitioners request, we might be able to derive the value of the
covenant. See, e.g., Annabelle Candy Co. v. Commissioner, supra
at 7-8; Beaver Bolt, Inc. v. Commissioner, T.C. Memo. 1995-549;
Standard Lumber & Hardware Co. v. Commissioner, T.C. Memo. 1958-
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