- 18 -
For the reasons discussed above, the Court holds that
petitioner's recognition of the loss on its covenants not to
compete in FYE March 31, 1996, was proper.
Modification of Form 8594
Petitioner, at trial and in its trial memorandum, posits
that it incorrectly allocated $200,000 to the covenant not to
compete in the Kaibab Agreement. Petitioner's position is that
"the amount allocated by the taxpayer to the noncompete agreement
should be allocated to the timber contracts acquired from
Kaibab." "That is what we should have done, you know."
Petitioner was apparently unaware, when it filed its Form 8594
for the Kaibab agreement, that Kaibab did not allocate any of the
contract price to the noncompete agreement.
It is unclear whether petitioner now seeks to modify its
position as to its original allocation. Regardless of whether
petitioner seeks to advance this argument, it is clear that
petitioner did not present this as an argument in the
alternative.
Assuming it now wishes to allocate $0 to the covenant,
petitioner must satisfy this Court that provisions of the
Internal Revenue Code, the Tax Court Rules of Practice and
Procedure, or case law allow for such a modification. Respondent
contends that this Court must apply the rule in Commissioner v.
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011