- 56 -
involuntarily terminated. See H. Rept. 98-861, supra at 851,
1984-3 C.B. (Vol. 2) at 105.
In 1989 the Commissioner issued proposed regulations under
section 280G in question and answer (Q&A) format.30 See sec.
1.280G-1, Proposed Income Tax Regs., 54 Fed. Reg. 19390 (May 5,
1989) (as corrected by 54 Fed. Reg. 25879 (June 20, 1989) and 54
Fed. Reg. 29061 (July 11, 1989)) (hereinafter, proposed
regulations). Q&A-22 of the proposed regulations defines
“contingent on a change in the ownership or effective control” in
a manner consistent with the legislative history:
In general, a payment is treated as “contingent” on a
change in ownership or control if the payment would
not, in fact, have been made had no change in ownership
or control occurred. A payment generally is to be
treated as one which would not, in fact, have been made
in the absence of a change in ownership or control
unless it is substantially certain, at the time of the
change, that the payment would have been made whether
or not the change occurred. * * *
30 The Commissioner issued revised proposed regulations on
Feb. 20, 2002, and final regulations under sec. 280G on Aug. 4,
2003. See sec. 1.280G-1, Proposed Income Tax Regs., 67 Fed. Reg.
7630 (Feb. 20, 2002); sec. 1.280G-1, Income Tax Regs. These
regulations are not applicable here because they apply to
payments contingent on a change in ownership or control that
occurs on or after Jan. 1, 2004. See sec. 1.280G-1, Q&A-48,
Proposed Income Tax Regs., 67 Fed. Reg. 7656 (Feb. 20, 2002);
sec. 1.280G-1, Q&A-48, Income Tax Regs. Where, as here, the
change in ownership or control occurred prior to Jan. 1, 2004,
the Commissioner has conceded that taxpayers may rely on the 1989
proposed regulations. See Preamble to sec. 1.280G-1, Income Tax
Regs., 68 Fed. Reg. 45745 (Aug. 4, 2003); see also Preamble to
sec. 1.280G-1, Proposed Income Tax Regs., 67 Fed. Reg. 7630 (Feb.
20, 2002).
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