Richard M. Boe and Mary Lots Boe v. Commissioner of Internal Revenue

Petition to review a decision of the Tax Court. The facts are not in dispute; the argument concerns their legal effect. We conclude that the decision of the Tax Court is correct. For convenience, we refer to petitioners, husband and wife, as “taxpayer”.

Deficiencies in personal income tax for the years 1952, 1953 and 1954 are involved. They arise from the purchase of the medical practice of F. W. Callison, M.D., who conducted a group medical practice. . Each patient signed a written contract, under which the doctor and his staff undertook to render medical, surgical, hospital and incidental services. In return, the patient paid “dues”, in advance, “in accordance with the then current, effective and published dues rate schedule for the attained age of the Member”. The agreement was terminable at will by either party.

Dr. Callison desired to withdraw from the practice, and four of his associates decided to buy him out. The parties negotiated a written agreement, effective August 1, 1947. It provided, among other things:

There was also a covenant not to compete.

The following additional facts are from the Tax Court’s findings:

In his notices of deficiencies, the Commissioner…