- 14 - A “Recap of Bill of Sale” (recap) provided the following allocation to the purchase: New vehicle inventory $(6,183) Parts inventory 174,673 Oil & grease inventory 1,308 Furniture & fixtures 50,000 Business taxes 2,838 Work-in-process and sublet inventories 754 Prepaid expenses 6,250 Expense of physical inventory 176 Goodwill 10,000 Covenant noncompetition agreement 290,000 Miscellaneous obligations (201,349) 68,468 1396,935 1We note a $754 difference between the $396,935 bill of sale recap and the $396,181 amount paid by Matthew B. West, Inc., on Jan. 5, 1995. Mr. Johnston initialed the recap reflecting the allocation of $290,000 to the “Covenant NonCompetition Agreement.” On January 12, 1995, Don Johnston, Inc., paid Mr. Johnston $200,000 and paid Wilson Ford $250,000.20 Mr. Johnston signed both Don Johnston, Inc., checks. Mr. Johnston did not report any income from the noncompetition agreement with Matthew B. West, Inc., on his 1994 or 1995 Federal income tax returns. Don Johnston, Inc., did not report any income from the noncompetition agreement with Matthew B. West, Inc., on its Federal income tax returns. Don Johnston, Inc., booked the payments for the noncompetition agreement with Matthew B. West, Inc., as a payable 20In 1990, Wilson Ford was an automobile dealership controlled by Mr. Johnston.Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
Last modified: May 25, 2011