327 F2d 659 Umstead v. United States

327 F.2d 659

64-1 USTC P 9241

A. Bruce UMSTEAD and Margaret W. Umstead, Appellants,
UNITED STATES of America, Appellee.

No. 9194.

United States Court of Appeals Fourth Circuit.

Decided Jan. 23, 1964.
Decided Jan, 23, 1964.

Thomas L. Norris, Jr., Raleigh, N.C. (N. A. Townsend, Jr., and Poyner, Geraghty, Hartsfield & Townsend, Raleigh, N.C., on brief), for appellants.

Morton K. Rothschild, Attorney, Department of Justice (Louis F. Oberdorfer, Asst. Atty. Gen., and Lee A. Jackson and David O. Walter, Attorneys, Department of Justice, William H. Murdock, U.S. Atty., and Roy G. Hall, Jr., Asst. U.S. Atty., on brief), for appellee.

Before HAYNSWORTH, BOREMAN, and J. SPENCER BELL, Circuit Judges.


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This is an appeal from a decision of the district court sitting without a jury. The question at issue is what part, if any, of the consideration received by the taxpayer for the sale of his interest in a partnership is allocable to good will and, therefore, to be treated as capital gain, and what part is allocable to his covenant not to compete and, therefore, to be treated as ordinary income.


We find substantial evidence in the record to support the finding of the district court that 75% Of the consideration is allocable to the sale of good will and 25% To the covenant not to compete. Since these findings are not clearly erroneous, we affirm. Cf. Commissioner v. Duberstein, 363 U.S. 278, 80 S.Ct. 1190, 4 L.Ed.2d 1218.