Peyton Manning: a new, if unconventional, definition of personal goodwill

Jim Alerding (another longtime Hall of Famer from the AICPA) points out that, if you’re confused about personal goodwill, just think of the quarterback of his home team; Peyton Manning.  “I challenge any one to replace him and keep the same value,” he said.   Substitute your own home team all-star if you need to.  As defined in Yoon v Yoon, a more conventional definition is “the type of goodwill...associated with revenues being generated because of the practitioner’s skills, knowledge, and reputation.”

Personal goodwill is an issue in many cases beyond those associated with divorce.   The most high profile example is Martin’s Ice Cream, the 1998 Tax court ruling (see BVLaw).  This ruling said that an oral contract with Haagen Daz was property of the individual and not of the company.  But, Alerding also sites new cases.   In Solomon (T.C. Memo, 2008-102) and Muskat, personal goodwill was confirmed, even though in both cases the taxpayer did not prevail.