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280G(b)(4)(A). We hold that petitioner has established that a
portion of the payments was reasonable compensation.
FINDINGS OF FACT
I. Background
Some of the facts have been stipulated and are so found. We
incorporate by this reference the stipulation of facts, the first
and second supplemental stipulation of facts, and accompanying
exhibits.
Square D Co., a Delaware corporation with its principal
executive offices in Palatine, Illinois, is the common parent of
an affiliated group of corporations making a consolidated return
(collectively, petitioner).
Prior to its 1991 acquisition by Schneider S.A. (Schneider),
discussed below, petitioner was a publicly held company whose
stock was traded on the New York Stock Exchange. During the
years in issue, petitioner was engaged in the United States and
abroad in the manufacture and sale of electrical distribution and
industrial control products. Electrical distribution products
included items such as circuit breakers, safety switches,
transformers, and surge suppressors; industrial control products
included push buttons, relays, control switches, voltage
controls, data communication systems, power protection systems,
and computerized control and data gathering systems. By 1990,
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