Opinion ID: 537242
Heading Depth: 2
Heading Rank: 2

Heading: Amount Attributable to Allan Molasky

Text: 17 The tax court, upon concluding that the sales agreement failed to allocate the $354,200 of consideration for the noncompetition provision among Allan Molasky, Mark Molasky and Racing Services, attributed $324,000 from the provision to Allan Molasky. In reaching this figure, the tax court reasoned that the provision most likely targeted Allan Molasky because neither Racing Services nor Mark Molasky presented much of a competitive threat. 6 We agree with the Molaskys that this division was erroneous. 18 The sales agreement, by its plain language, provided that a portion of the noncompetition provision would be applied directly to Racing Services' debt to the publisher of the Daily Racing Form. The noncompetition provision expressly allocated the amount of this obligation, totalling $129,777.08, to the corporation, and neither Allan nor Mark Molasky received any portion of it. Therefore, the amount attributable to Racing Services under the noncompetition provision was at least $129,777.08. The agreement left the remaining amount, $224,422.92, unallocated among Allan Molasky, Mark Molasky and Racing Services. On remand, the tax court therefore should consider what portion of the unallocated $224,422.92 comprised compensation to Allan Molasky. 19 We cannot agree with the Molaskys' additional contention that the Commissioner is estopped from proceeding against Allan and Gloria Molasky for the income received under the noncompetition provision merely because the Commissioner assessed a deficiency against Mark Molasky for the same amount. The Commissioner may issue alternative notices of deficiency in order to protect revenues. Estate of Goodall v. Commissioner, 391 F.2d 775, 781-84 (8th Cir.), cert. denied, 393 U.S. 829, 89 S.Ct. 96, 21 L.Ed.2d 100 (1968). 20 We reject, as well, the Molaskys' assertion that they fulfilled their tax obligation by belatedly reporting the $354,200 on the corporate tax return for Melanjo Investments, Inc. Because income is taxable to those who earn it, Lucas v. Earl, 281 U.S. 111, 114-15, 50 S.Ct. 241, 241, 74 L.Ed. 731 (1930), the Molaskys cannot shift the income earned by Allan Molasky individually to their family corporation.