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transaction to the stock sold, the transaction should result in
capital gain to William Becker with nothing allocable to the
covenant not to compete.
BHC contends that the Danielson rule does not apply because
the purchase documents are ambiguous as to an allocation of the
consideration between the stock and the covenant not to compete.
BHC argues that the mutual intent test set forth in Better
Beverages controls. BHC argues that, because the parties
mutually intended to allocate a portion of the consideration to
the covenant not to compete, the Court should make an independent
determination of the economic value of the covenant.
William Becker and respondent counter that, even if the
Danielson rule does not apply, none of the consideration is
allocable to the covenant not to compete because there was no
mutual intent to make such an allocation.
Regardless of whether we apply the Danielson rule or the
mutual intent test set forth in Better Beverages, the result is
the same. For the reasons discussed below, we find that none of
the consideration paid by BHC to William Becker is allocable to
the covenant not to compete.
II. Analysis Under the Danielson Rule
Under the Danielson rule, William Becker and BHC will be
bound to the unambiguous allocations in the purchase documents,
absent a showing of mistake, undue influence, fraud, duress, etc.
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