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business to which goodwill attached. If petitioner did not sell
or exchange a capital asset, then the termination payment is
taxable as ordinary income.
Long-term capital gain is defined as gain from the sale or
exchange of a capital asset held for more than 1 year. Sec.
1222(3). A “capital asset” means property held by the taxpayer
(whether or not connected with his trade or business) that is not
covered by one of five specifically enumerated exclusions. Sec.
1221.
In Schelble v. Commissioner, T.C. Memo. 1996-269, affd. 130
F.3d 1388 (10th Cir. 1997), we considered whether the taxpayer
received gain from the sale or exchange of a capital asset.
Pursuant to the terms of the agreement with the insurance company
for which he was an agent, the taxpayer was required to return
all records, manuals, materials, advertising, and supplies or
other property of the company. Id. We concluded that there was
no evidence of “vendible business assets”, and the record did not
support a finding of a sale of assets of a business.
The Court of Appeals in Schelble v. Commissioner, 130 F.3d
at 1394, held that there was “no evidence in the record of
vendible assets to support the sale of Mr. Schelble’s insurance
business”. It observed the following:
By transferring policy records to * * * [the insurance
company] pursuant to the Agreement, * * * [the
taxpayer] maintains he transferred insurance business
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