R. William Becker and Mary Ann Becker - Page 11

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          the covenant not to compete.  William and Mary Ann Becker filed a           
          petition with this Court on August 26, 2002, seeking a                      
          redetermination of the deficiency.                                          
               On its Federal consolidated corporate income tax return for            
          the taxable year ended September 30, 1996, BHC claimed an                   
          amortization deduction of $5,307,600 attributable to the covenant           
          not to compete.  As a result of this and other deductions, BHC              
          generated a net operating loss in 1996 and filed a Form 1139,               
          Corporation Application for a Tentative Refund, to carry back               
          that loss to its taxable years ended September 30, 1993,                    
          September 30, 1994, and September 30, 1995.  On January 30, 2003,           
          respondent issued a notice of deficiency disallowing, inter alia,           
          BHC’s amortization deduction taken in 1996.  Respondent                     
          determined deficiencies in BHC’s Federal income tax of                      
          $1,566,852, $86,973, and $245,644, respectively, for BHC’s                  
          taxable years ended September 30, 1993, September 30, 1994, and             
          September 30, 1995.  BHC filed a petition with this Court on                
          April 29, 2003, seeking a redetermination of the deficiencies.              
                                       OPINION                                        
               William Becker and BHC have divergent views regarding the              
          characterization of the transaction under review and its tax                
          consequences.  William Becker contends that the total                       
          consideration paid under the purchase documents is attributable             
          to his corporate stock in BHC, a capital asset, resulting in                






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