Schulz

Two questions arise on appeal from the Tax Court: (1.) Whether the amount paid to a retiring partner for his share of a partnership, above the tangible asset value of the partnership, represents good will or a covenant not to compete, and (2.) Whether income from the business for February, 1952 should be reported in a separate return for that month and included in the individual returns of the partners for 1952, or whether such amounts should be included in the partnership return for the fiscal year beginning February 1, 1952 and ending January 31, 1953, and hence included in the partner’s returns for the year 1953. The Tax Court decided against the taxpayers on both issues, and its judgment is affirmed in that its findings on the facts are not clearly erroneous.

We summarize the findings of the Tax Court:

*53 On November 1, 1946, Ray H. Schulz, John W. Schulz and Melvin F. Klagues (hereinafter called “continuing partners”) and Stanley C. Landen (hereinafter called “Landen”), organized a partnership by oral agreement under the firm name of Schulz Tool and Manufacturing Company (hereinafter the business will be called “Schulz Tool”).

In the years that followed, Schulz Tool grew…