- 24 -
termination payment. If petitioner had competed against State
Farm after retiring, he would not have received a termination
payment. We find that petitioner entered into a covenant not to
compete with State Farm and that a portion of the termination
payment was paid for the covenant not to compete.
Proceeds allocable to a covenant not to compete are properly
classified as ordinary income. See General Ins. Agency, Inc. v.
Commissioner, 401 F.2d at 329. Petitioner did not allocate any
portion of the termination payment to the covenant not to
compete, and it is unnecessary for us to make such an allocation
because the termination payment is classified as ordinary income.
We have considered all arguments by the parties and amicus,
and, to the extent not discussed above, conclude they are
irrelevant or without merit.
To reflect the foregoing,
Decision will be
entered for respondent.
Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Last modified: May 25, 2011