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Thus, Standard Lumber & Hardware Co. is significantly different
from this case.
Petitioners cite Patterson v. Commissioner, 810 F.2d at 571,
for the proposition that a covenant not to compete has value if
it has economic reality. Petitioners' reliance on Patterson is
misplaced; Patterson is in accord with respondent's position
here. We held in Patterson that the taxpayer could not amortize
any amount because there was a written agreement in which all of
the payment to the withdrawing party was specifically for stock
and goodwill and none was for a covenant not to compete. See id.
at 573. This was so even though there was a covenant not to
compete which may have had some value. Like the taxpayer in
Patterson, petitioner and Jasiak signed an agreement which said
all of Cost Less' payment to Jasiak was for stock. Thus, whether
the covenant not to compete had independent value does not alter
the outcome of this case.
In none of the other cases petitioners cite was there a
written agreement specifying that all of the payment to the
withdrawing party was for stock. See Schulz v. Commissioner, 294
F.2d 52, 55 (9th Cir. 1961), affg. 34 T.C. 235 (1960); O'Dell &
Co. v. Commissioner, 61 T.C. 461, 467 (1974); United Fin. &
Thrift Corp. v. Commissioner, 31 T.C. 278, 285-286 (1958), affd.
282 F.2d 919 (4th Cir. 1960); Silberman v. Commissioner, 22 T.C.
1240 (1954); Michaels v. Commissioner, 12 T.C. 17, 19 (1949);
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