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(A) In general.--The term “parachute payment” means any
payment in the nature of compensation to (or for the
benefit of) a disqualified individual if--
(i) such payment is contingent on a
change--
(I) in the ownership or
effective control of the
corporation, or
(II) in the ownership of a
substantial portion of the assets
of the corporation, and
(ii) the aggregate present value of the
payments in the nature of compensation to (or
for the benefit of) such individual which are
contingent on such change equals or exceeds
an amount equal to 3 times the base amount.
For purposes of clause (ii), payments not treated as
parachute payments under paragraph (4)(A) * * * [i.e.,
section 280G(b)(4)(A), regarding reasonable
compensation, set out below] shall not be taken into
account.
As provided in the foregoing flush language, the amount treated
as a “parachute payment” (and therefore also an “excess parachute
payment”) does not include the portion of a contingent-on-
control-change payment that the taxpayer proves is reasonable
compensation, as provided in section 280G(b)(4)(A):
(4) Treatment of amounts which taxpayer
establishes as reasonable compensation.--In the case of
any payment described in paragraph (2)(A) [i.e.,
section 280G(b)(2)(A), set out above]--
(A) the amount treated as a parachute
payment shall not include the portion of such
payment which the taxpayer establishes by
clear and convincing evidence is reasonable
compensation for personal services to be
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