02-0372 Schwartz v. Wisconsin Department of Revenue

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“The Commission concluded that it would be reasonable to allocate to the covenant not to compete the $112,278 paid to Schwartz under the Agreement prior to the expiration of the covenant on March 1, 1991. This amount consisted of the $100,000 payment made to Schwartz upon closing, plus two months of principal payments of $6139 pursuant to the promissory note. …

“In summary, we uphold the Commission’s selection of the Kreider [v. Commissioner of Internal Revenue, 762 F.2d 580(1985)] test as the proper legal standard for allocating a payment between a covenant not to compete and other claims when the parties’ agreement is silent on the matter of allocation. Under that test, we further uphold the Commission’s determinations that the parties’ intended a portion of the $175,000 as compensation for Schwartz’s covenant not to compete and that the allocation of $112,278 to the covenant was economically reasonable.”

Affirmed.

Recommended for publication in the official reports.

Dist II, Waukesha County, Foster, J.; Nettesheim, J.

Attorneys:

For Appellant: Randall Schwartz, Brookfield

For Respondent: F. Thomas Creeron III, Madison