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that the parties mutually intended to allocate a portion of the
purchase price to the covenants. Peterson Mach. Tool, Inc. v.
Commissioner, supra at 83-84; Jorgl v. Commissioner, supra.
Unlike Peterson and Jorgl, the purchase documents in this case do
not explicitly allocate a portion of the consideration to the
covenant not to compete, but instead explicitly allocate 100
percent of the consideration to William Becker’s stock. Peterson
and Jorgl do not support BHC’s contention that the parties
mutually intended to allocate a portion of the consideration to
the covenant not to compete.
In Ansan Tool, the Tax Court utilized a test that is not
applicable in the Eleventh Circuit, stating: “The Seventh
Circuit, to which an appeal in this case would lie, looks to all
the evidence pertinent to the covenant to determine if it has
independent value and, if it does, to determine how much the
covenant is worth.” Ansan Tool & Manufacturing Co. v.
Commissioner, supra. The Tax Court then determined that, because
the covenant not to compete had independent economic value, a
portion of the purchase price was allocable to it. Id. Under
the mutual intent test, the question is not whether the covenant
not to compete had independent economic value, but whether “the
parties mutually intended at the time of the sale that some
portion of the lump sum consideration be allocated to the
seller’s covenant not to compete”. Better Beverages, Inc. v.
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