Recovery Group, Inc. v. Commissioner
United States Court of Appeals for the First Circuit
652 F.3d 122 (2011)
- Written by Eric Miller, JD
Facts
James Edgerly was a cofounder, employee, and stockholder of Recovery Group, Inc. (plaintiff), which provided consulting to insolvent companies. Edgerly wished to leave Recovery Group, which agreed to redeem all of Edgerly’s shares—23 percent of the company’s outstanding stock—for $255,908. Additionally, Recovery Group paid $400,000 for Edgerly’s agreement to refrain from competitive activities from July 2002 to July 2003. Recovery Group amortized the $400,000 over the one-year duration of the covenant not to compete. However, the Commissioner of Internal Revenue (the commissioner) (defendant) deemed the covenant to be an intangible under § 197 of the Internal Revenue Code, subject to a 15-year amortization period. Recovery Group challenged this determination in the United States Tax Court, arguing that such treatment was applicable only to acquisitions of a substantial portion of stock in a corporation. The court ruled in favor of the commissioner. Recovery Group appealed. The United States Court of Appeals for the First Circuit granted certiorari.
Rule of Law
Issue
Holding and Reasoning (Torruella, J.)
What to do next…
Here's why 825,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 46,400 briefs, keyed to 990 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.
