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necessarily arising from strict contractual relationships.
Consistent with its dictionary definition, in most of the
instances where it is used in the Internal Revenue Code, the word
"arrangement" refers to some general relationship or overall
understanding between or among parties in connection with a
specific activity or situation. Generally, it is not limited
only to contractual relationships, or used in a way that suggests
that its terms and conditions must be included in a single
agreement, contractual or otherwise. Congress obviously
recognized a distinction between a contract and the broader
concept of an "arrangement", as is evident from those sections of
the Internal Revenue Code that make reference to both.3 In those
sections where only a contractual relationship is contemplated,
"arrangement" is modified by the word "contractual".4
3 See, e.g., sec. 401(a)(30) (dealing with employee benefit
plans), which includes the following language: "all other plans,
contracts, or arrangements"; sec. 4003(d) (dealing with excise
taxes on vehicles, parts and accessories), which includes the
following language: "In the case of a contract, sale, or
arrangement"; sec. 4975(d)(2) (dealing with excise taxes on
prohibited transactions), which includes the following language:
"any contract, or reasonable arrangement"; and sec. 7701(e)(3)
(a definitional section), which includes the following language:
"Special rules for contracts or arrangements involving solid
waste disposal, energy, and clean water facilities."
4 See, e.g., sec. 465(c)(6)(B) (pertaining to the rules
applicable with respect to accounting periods), which includes
the following language: "The term 'equipment leasing' does not
include the leasing of master sound recordings, and other similar
contractual arrangements"; and sec. 4216(b)(5)(B) (dealing with
excise taxes on containers), which includes the following
language: "the lowest price shall be determined * * * without
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Last modified: May 25, 2011