Abstract

http://ssrn.com/abstract=1972444
 


 



Disposable Personal Goodwill, Frosty the Snowman, and Martin Ice Cream All Melt Away in the Bright Sunlight of Analysis


Bret Wells


University of Houston Law Center

Craig M Bergez


Porter Hedges LLP; University of Houston Law Center

December 14, 2011

Nebraska Law Review, Vol. 91, 2012
U of Houston Law Center No. 2011-A-10

Abstract:     
The current rage in dispositional tax planning for closely-held C corporations is to bifurcate the sale transaction and to argue that the shareholder sold “personal goodwill” that is owned at the shareholder level. This planning is premised on the position that certain goodwill associated with the target C corporation can be, and is in fact, owned (for tax purposes) by one or more shareholders. If the “personal goodwill” is in fact owned by the selling shareholders and can be sold by the selling shareholders to the buyer, then the disposition of this “personal goodwill” is not subject to corporate-level taxation.

Although this planning has garnered much attention and is being marketed by many in the tax community as an innovative solution to avoid corporate-level taxes, the authors believe that this tax planning technique is unsustainable for several reasons set forth in the article. The article analyzes this technique in terms of existing transfer pricing regulations, the duty of consistency doctrine, existing case law involving goodwill (including the Tax Court’s decision in Martin Ice Cream).

Number of Pages in PDF File: 56

Keywords: Martin Ice Cream, intangibles, marketing intangibles, goodwill, personal goodwill, residual goodwill

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Date posted: December 16, 2011 ; Last revised: July 9, 2012

Suggested Citation

Wells, Bret and Bergez, Craig M, Disposable Personal Goodwill, Frosty the Snowman, and Martin Ice Cream All Melt Away in the Bright Sunlight of Analysis (December 14, 2011). Nebraska Law Review, Vol. 91, 2012; U of Houston Law Center No. 2011-A-10. Available at SSRN: http://ssrn.com/abstract=1972444

Contact Information

Bret Wells (Contact Author)
University of Houston Law Center ( email )
100 Law Center
Suite 230 BLB
Houston, TX 77204-6054
United States
Craig M. Bergez
Porter Hedges LLP ( email )
1000 Main St.
Houston, TX 77002
United States
HOME PAGE: http://www.porterhedges.com
University of Houston Law Center ( email )
100 Law Center
Suite 230 BLB
Houston, TX 77204-6054
United States
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