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the parties’ intent. See Dixie Fin. Co. v. United States, supra
at 505.
Because (i) there is evidence of mutual mistake, (ii) the
Noncompete Agreement is a subsequent, not a prior or
contemporaneous agreement, in relation to the Purchase Agreement,
and (iii) the conflicting Purchase Agreement and Noncompete
Agreement are both in writing and read together create an
ambiguity, we reject respondent’s invocation of the Danielson
rule and shall consider all extrinsic evidence in the record in
an effort to determine the intent of the parties to the buyout
agreement.
Respondent, citing Deshotels v. United States, 450 F.2d 961
(5th Cir. 1971), also argues that petitioner’s deductions in
connection with the covenant must fail because petitioner is
relying on the parol testimony of parties without adverse
interests to vary the clear terms of the Purchase Agreement. In
Deshotels, the Court of Appeals for the Fifth Circuit held that,
for Federal income tax purposes, a taxpayer cannot establish his
claim to a deduction by seeking to controvert the terms of his
written contract with parol testimony of parties to the contract
that do not have interests adverse to the interpretation being
urged. Forest and Wagner each testified that it was understood
by both throughout their negotiations that a covenant not to
compete would be required from Wagner as part of the buyout and
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