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Significant Court Cases, Revenue Rulings, Internal Revenue Codes, and Treasury Regulations - Miscellaneous

BMW of North America, Inc., 39 F. Supp. 2d 445; 83 A.F.T.R.2d 99-787
Valuation of Vehicles Provided to Employees
Ruling:

  • U.S. District Court granted partial summary judgement to the Government.
  • BMW cannot use the special valuation rules to determine the fringe benefit value of BMW cars provided to its employees. BMW improperly applied the rule.

Burien Nissan Inc., et al. v. Commissioner, T.C. Memo 2001-116, May 14, 2001
Covenant Not to Compete
Ruling:

  • The Tax Court determined that the taxpayer's covenant not to compete agreement was entered into after the enactment of IRC 197. The taxpayer was required to amortize the agreement over a period of 15 years as required by IRC 197.

Frontier Chevrolet Co. v. Commissioner, 116 T.C. No. 23, May 14, 2001
Covenant Not to Compete
Ruling:

  • The Tax Court determined that the taxpayer's covenant not to compete agreement was entered into pursuant to a redemption of his stock. The taxpayer was required to amortize the covenant not to compete over 15 years.

Howard Pontiac GMC, Inc., T.C. Memo 1997-313, July 7, 1997
Covenant Not to Complete
Ruling:

  • The Tax Court "split the baby in half" ruling that neither the taxpayer nor the Government properly valued a covenant not to compete.

John Jorgl, et ux. v. Commissioner 264 F.3d 1145; 88 A.F.T.R.2d 2001-5182; No. 00-12462 (28 Jun 2001)

Couple Must Recognize Income From Covenant Not to Compete
The Eleventh Circuit, in a per curiam opinion affirming the Tax Court, has held that a couple must recognize income from a covenant not to compete on the sale of their business, because the parties intended to allocate sales price to the noncompete agreement.


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