Section 34 Covenants Not to Compete

• Library: Bus Trans 2005

Often, a purchaser of the stock or assets of a corporation will request that the shareholders or the selling corporation enter into a noncompetition agreement (“covenant not to compete”). Any amount that is paid or incurred under a covenant not to compete is amortized over a 15-year period, and any amount paid or incurred under the covenant thereafter is amortized over the remaining months in the 15-year period as of the beginning of the month in which the amount is paid. I.R.C. § 197. Any amount that the...