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issue here relate to an asset--the loan--that petitioner
obtained, much as the expenditures in Waring Prods. Corp. related
to services performed for the taxpayer, albeit under a contract
to which the taxpayer was not a party. Under the circumstances
of this case, where the loan acquisition costs were incurred on
behalf of petitioner and then paid by petitioner, it is
appropriate to allow petitioner to deduct the costs it paid.
II. Parachute Payments
Respondent disallowed $7,586,105 of the deduction claimed by
petitioner in 1992 with respect to the Retention Payments and
1991 SRP Benefits paid to the Retained Executives in that year,
on the grounds that this amount constituted “excess parachute
payments” within the meaning of section 280G.28 After
concessions, the parties dispute two issues underlying
respondent’s determination. First, the parties dispute whether
28 On brief, respondent concedes that a portion of the 1991
SRP Benefits was not contingent on a change in control within the
meaning of sec. 280G(b)(2)(A)(i) on the grounds that it falls
within a safe harbor provided in sec. 1.280G-1, A-24(c), Proposed
Income Tax Regs., 54 Fed. Reg. 19399 (May 5, 1989), because
payment of that portion was substantially certain, regardless of
the change in control, if the Retained Executives continued to
work for petitioner until the vesting of their rights to these
payments. Further, the parties have stipulated that the interest
component of the 1991 SRP Benefits is deductible by petitioner
under sec. 163 in 1992 and does not constitute a “parachute
payment” within the meaning of sec. 280G. For convenience, we
hereinafter refer to the portion of the 1991 SRP Benefits whose
deductibility remains in dispute as the “disputed 1991 SRP
Benefits” and the portion conceded by respondent as deductible as
the “noncontingent 1991 SRP Benefits”.
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