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terminated, including but not limited to the noncompetition
agreement and the purchase of Mr. Johnston’s remaining 61,200
shares of stock. Moreover, the terms contained in the
noncompetition agreement ratified on December 13, 1993, were
different from the terms contained in the 1990 covenant. Each
agreement defined different geographic zones, different time
periods, and different payment amounts over different payment
schedules. Thus, the later agreement did not add terms that were
lacking in the previous agreement; it was a completely different
agreement.
We find that the noncompetition agreement was entered into
after August 10, 1993. Therefore, we hold that Burien Nissan
must amortize the payments made to Mr. Johnston for the
noncompetition agreement over 15 years pursuant to section 197.
II. Operating Loss Carryforward
Burien Nissan argues that its operating loss carryforward
for 1994 should be adjusted because it is entitled to additional
interest deductions beyond those claimed on its original Federal
income tax returns.23 Burien Nissan offered Federal income tax
23Burien Nissan also asserted that it was entitled to deduct
$9,783 in connection with a $20,000 cash payment to Mr. Buchner,
as claimed on its 1994 amended Federal income tax return. Burien
Nissan’s original returns for 1994 through 1996 reflected an
amortizable payment of $9,783 in connection with the settlement
of the law suit with Mr. Buchner. Respondent conceded that the
$9,783 payment was deductible in 1994 and that the amortization
payment should be reversed. In connection with the settlement
with Mr. Buchner, Burien Nissan amortized $598 in 1994, $652 in
1995, and $652 in 1996. Burien Nissan incorrectly asserted that
it was entitled to an amortization reversal of $3,684 in 1994.
(continued...)
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