https://www.taxtmi.com/caselaws?id=10129 Goodwill is treated as property for gift-tax purposes, and reconstitution of a partnership with admission of new partners may trigger a deemed gift where existing partners reduce or relinquish their interest in goodwill. Mere contribution of capital by incoming partners or their participation in the business does not, by itself, establish adequate consideration. The adequacy of consideration must be measured against the value of the goodwill rights transferred, and a reduced profit share coupled with induction of new partners may amount to a taxable transfer if the benefit conferred exceeds the consideration received. On the stated facts, the relinquishment was not supported by adequate consideration and was treated as a deemed gift. en-us Wed, 04 Aug 2004 00:00:00 +0530 Tue, 07 Jul 2009 19:44:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=10129 Goodwill is treated as property for gift-tax purposes, and reconstitution of a partnership with admission of new partners may trigger a deemed gift where existing partners reduce or relinquish their interest in goodwill. Mere contribution of capital by incoming partners or their participation in the business does not, by itself, establish adequate consideration. The adequacy of consideration must be measured against the value of the goodwill rights transferred, and a reduced profit share coupled with induction of new partners may amount to a taxable transfer if the benefit conferred exceeds the consideration received. On the stated facts, the relinquishment was not supported by adequate consideration and was treated as a deemed gift. Case-Laws Income Tax Wed, 04 Aug 2004 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=10129