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are normally void and unenforceable under Oklahoma State law, are
enforceable if they fall within one of the two statutorily
created exceptions to the general rule–-covenants given in
connection with the sale of goodwill or covenants given in
connection with the dissolution of a partnership. Okla. Stat.
Ann. tit. 15, secs. 218 and 219 (West 1986 and Supp. 2000);
Bayly, Martin & Fay, Inc. v. Pickard, supra at 1170. Assuming
the covenants in this case were reasonable and/or were given in
connection with the sale of goodwill, it was unnecessary to first
distribute the Clinpath stock to petitioner’s shareholders.10
Petitioner has failed to demonstrate either that the covenants in
question were unreasonable or that they were not adequately tied
to the sale of goodwill under Oklahoma State law.
We conclude, therefore, that NHL’s demand for binding and
enforceable covenants not to compete does not constitute a
corporate business purpose within the meaning of section 1.355-
2(d)(3)(ii), Income Tax Regs., and, therefore, is insufficient to
overcome the substantial evidence of device in this case.11
10Petitioner in its posttrial briefs appears to concede that
the sale of Clinpath involved the sale of both “practice
goodwill” inherent in the going concern value of the clinical
business and “professional goodwill” possessed by petitioner’s
physician-shareholders.
11Even if we were to conclude that any of the alleged
corporate business purposes satisfied the requirements of sec.
1.355-2(d)(3)(ii), Income Tax Regs., we would still conclude
that, under the balancing test required by the regulations, the
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