- 14 - case decided by Court of Appeals for the Fifth Circuit (Fifth Circuit) prior to October 1, 1981, will be binding precedent upon it. See Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981). Therefore, we review the caselaw in both the Fifth Circuit and Eleventh Circuit in making our determinations herein. A. The Strong Proof Rule and the Mutual Intent Test When first considering tax allocations in cases involving covenants not to compete, the Fifth Circuit adopted the “strong proof” rule set out in Ullman v. Commissioner, supra at 308, to wit: when the parties to a transaction * * * have specifically set out the covenants in the contract and have there given them an assigned value, strong proof must be adduced by them in order to overcome the declaration. * * * See, e.g., Sonnleitner v. Commissioner, 598 F.2d 464, 467 (5th Cir. 1979), affg. T.C. Memo. 1976-249; Dixie Fin. Co. v. Commissioner, 474 F.2d 501, 505 (5th Cir. 1973), affg. Stewart v. Commissioner, T.C. Memo. 1971-114; Balthrope v. Commissioner, 356 F.2d 28, 31 (5th Cir. 1966), affg. T.C. Memo. 1964-31; Barran v. Commissioner, 334 F.2d 58, 63 (5th Cir. 1964), affg. in part and revg. in part 39 T.C. 515 (1962). However, in 1980, the Fifth Circuit departed from the “strong proof” rule. In Better Beverages, Inc. v. United States, supra at 425, the Fifth Circuit adopted a mutual intent test, citing Annabelle Candy Co. v. Commissioner, 314 F.2d 1 (9th Cir.Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
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