- 57 -
Sec. 1.280G-1, A-22(a), Proposed Income Tax Regs., 54 Fed. Reg.
19398 (May 5, 1989). The next Q&A clarifies this rule with
respect to payments made under agreements entered after a change
in control. Q&A-23 of the proposed regulations states:
Q-23: May a payment be treated as contingent on a
change in ownership or control if the payment is made
under an agreement entered into after the change?
A-23: (a) No. Payments are not treated as
contingent on a change in ownership or control if they
are made (or to be made) pursuant to an agreement
entered into after the change. For this purpose, an
agreement that is executed after a change in ownership
or control, pursuant to a legally enforceable agreement
that was entered into before the change, will be
considered to have been entered into before the change.
* * * [Sec. 1.280G-1, Q&A-23, Proposed Income Tax
Regs., 54 Fed. Reg. 19399 (May 5, 1989); emphasis
added.]
Both petitioner and respondent have framed the “contingent
on control change” issue as turning upon the precise meaning of
the phrase “pursuant to” in Q&A-23 of the proposed regulations.31
While proposed regulations are not competent authority and “carry
no more weight than a position advanced on brief by the
31 We note that the revised proposed and final regulations
under sec. 280G (see supra note 28), modified Q&A-23 to provide
that where a taxpayer gives up rights under an agreement entered
into before a change in control as consideration for rights under
a new agreement, entered into after a change in control, the
payments under the post-change agreement will be considered
contingent on a change in control to the extent payments under
the post-change agreement have the same value as those due under
the pre-change agreement. See sec. 1.280G-1, Q&A-23, Proposed
Income Tax Regs., 67 Fed. Reg. 7630 (Feb. 20, 2002); sec. 1.280G-
1, Q&A-23, Income Tax Regs.
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