Sign In
Events
Newsletters
Search

Close

Close Search

Cancel

SEARCH
MY LAW.COMNEW

Recovery Group, Inc., et al v. Commissioner of Internal Revenue

X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Before Torruella, Circuit Judge, Souter, *fn1 Associate Justice, and Boudin, Circuit Judge.

TORRUELLA, Circuit Judge. The present appeal requires us to determine whether a covenant not to compete, entered into in connection with the acquisition of a portion of the stock of a corporation that is engaged in a trade or business, is considered a “section 197 intangible,” within the meaning of I.R.C. § 197(d)(1)(E), regardless of whether the portion of stock acquired constitutes at least a “substantial portion” of such corporation’s total stock. For the reasons stated below, we answer in the affirmative.

Petitioners-Appellants Recovery Group, Inc. (“Recovery Group”) and thirteen individuals who held shares in said corporation appeal the United States Tax Court’s decision in Recovery Group, Inc. v. Comm’r of Internal Revenue, T.C. Memo 2010-76, 99 T.C.M. (CCH) 1324 (U.S. Tax Ct. Apr. 15, 2010), which found in favor of respondent Commissioner of Internal Revenue (the “Commissioner”) concerning the correctness of certain income tax deficiencies assessed by the United States Internal Revenue Service (the “IRS”) against the appellants.*fn2 These deficiencies resulted from the finding that a certain covenant not to compete — entered into by Recovery Group in connection with the redemption of 23% of the shares of a former shareholder — constituted a “section 197 intangible,” and, consequently, that Recovery Group had to amortize the payments it made under such covenant not to compete over the fifteen-year period prescribed by I.R.C. § 197(a), and not over the duration of the covenant, as Recovery Group had reported in its corresponding income tax returns. Because we find that the aforementioned covenant not to compete was an “amortizable section 197 intangible,” we affirm.

Trending Stories

 
Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.

LEARN MORE

More From ALM

Premium Subscription
With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now
Team Accounts
Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now
Bundle Subscriptions
Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now
Go to CLE Center
Middle East Legal Awards 2024
April 25, 2024
Dubai

Law firms & in-house legal departments with a presence in the middle east celebrate outstanding achievement within the profession.


Learn More
BenefitsPRO Broker Expo 2024
April 29, 2024 - May 01, 2024
Aurora, CO

The premier educational and networking event for employee benefits brokers and agents.


Learn More
Pennsylvania Legal Awards 2024
May 15, 2024
Philadelphia, PA

The Legal Intelligencer honors lawyers leaving a mark on the legal community in Pennsylvania and Delaware.


Learn More
Go to Events Go to Webcasts
Senior In-House Contracts Administrator

A large and well-established Tampa company is seeking a contracts administrator to support the company's in-house attorney and manage a wide...


Apply Now ›
COMMERCIAL FINANCE ATTORNEY - STAMFORD, HARTFORD OR NEW HAVEN OFFICES

We are seeking an attorney to join our commercial finance practice in either our Stamford, Hartford or New Haven offices. Candidates should ...


Apply Now ›
CORPORATE ATTORNEY (8+ Years) - REMOTE, CT

We are seeking an attorney to join our corporate and transactional practice. Candidates should have a minimum of 8 years of general corporat...


Apply Now ›
Go to Lawjobs
MELICK & PORTER, LLP
04/15/2024
Connecticut Law Tribune

MELICK & PORTER, LLP PROMOTES CONNECTICUT PARTNERS HOLLY ROGERS, STEVEN BANKS, and ALEXANDER AHRENS


View Announcement ›
Apruzzese, McDermott, Mastro & Murphy, P.C.
04/11/2024
New Jersey Law Journal

Professional Announcement


View Announcement ›
Robbins Alloy Belinfante Littlefield
04/08/2024
Daily Report

Daily Report 1/2 Page Professional Announcement 60 Days


View Announcement ›
Go to Professional Announcements