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GALE, Judge: Respondent determined deficiencies in
petitioner’s Federal income taxes of $7,420,227, $28,971,522, and
$15,285,996 for the taxable years 1990, 1991, and 1992,
respectively. Petitioner claims overpayments of $12,486,577 and
$18,289 for taxable years 1990 and 1992, respectively.
After concessions, the issues remaining for decision1 are:
(1) Whether petitioner may deduct in 1991 a loan commitment
fee incurred in connection with the provision of financing for
petitioner’s acquisition. We hold that petitioner may.
(2) Whether petitioner may deduct in 1991 legal fees
incurred in connection with the provision of financing for
petitioner’s acquisition. We hold that petitioner may.
(3) Whether certain lump-sum payments made by petitioner to
senior executives in 1992 and deducted in that year were
contingent on a change in the ownership or effective control of
petitioner within the meaning of section 280G(b)(2)(A)(i).2 We
hold that they were.
(4) What part, if any, of the foregoing payments constituted
reasonable compensation in 1992 within the meaning of section
1 An additional issue involving the application of sec.
267(a)(3) has been addressed in a separate opinion. See Square D
Co. & Subs. v. Commissioner, 118 T.C. 299 (2002).
2 Unless otherwise noted, all section references are to the
Internal Revenue Code in effect for taxable years 1991 and 1992,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
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