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Nebraska’s business, York wrote off the $151,890 and paid $7,000
of Mid-Nebraska’s accounts payable, for a total purchase price of
$158,890.
On April 22, 1993, petitioner, on behalf of Mid-Nebraska,
and Sack, on behalf of York, executed an addendum to the
acquisition agreement purportedly changing the allocation of the
sale price on assets other than fixed assets as follows:
Item Amount
Employment agreements $16,372
Customer list 130,978
Noncompete 1,489
Total 148,839
Petitioner signed and filed Mid-Nebraska’s Form 1120, U.S.
Corporation Income Tax Return, for the year ended December 31,
1992 (1992 return), on October 15, 1993. The 1992 return
reported, among other things, a capital gain of $125,645 and
ordinary gain of $13,760 from the sale of property consisting of
“vehicle, accts receivable, non-compete, employment agreements,
customer list, goodwill”. Form 4797, Sales of Business Property,
filed with the 1992 return showed the following calculation of
the capital gain and ordinary gain:
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Last modified: May 25, 2011