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placing an additional burden on the Retained Executives. Despite
these challenges, petitioner met its business plan for 1992.
IV. Tax Returns, Notice of Deficiency, and Petition
On its 1992 Federal income tax return, petitioner claimed a
deduction for $10,384,490 of the aggregate $15,867,291 in
Retention Payments and 1991 SRP Benefits paid to the Retained
Executives in December 1992. (See supra p. 31 table.)
Petitioner concluded that the $5,482,801 balance of such payments
should be deferred under section 461(a) and (h) until economic
performance occurred in 1993, 1994, and 1995. In a notice of
deficiency, respondent determined that $7,586,105 of the
deduction claimed in 1992 should be disallowed as excess
parachute payments under section 280G.
On its 1991 Federal income tax return, petitioner claimed a
deduction under section 162(a) for the $699,027 it paid to Rogers
& Wells for the firm’s services to Banque Paribas in connection
with the litigation surrounding the acquisition of petitioner by
Schneider. In the notice of deficiency, respondent determined
that this deduction should be disallowed.
Petitioner did not claim a deduction on its 1991 return for
the $1,056,020 it paid to Schneider as reimbursement for
Schneider’s 1991 payment of the loan commitment fees. In an
amendment to its petition, petitioner asserted entitlement to a
deduction in 1991 for the foregoing amount. In his answer to the
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