Square D Company and Subsidiaries - Page 83

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          endorsed the previously quoted legislative history’s gloss on the           
          meaning of “contingent on a change in * * * control” as used in             
          the statute.  See Cline v. Commissioner, 34 F.3d 480 (7th Cir.              
          1994).  In Cline, the taxpayer entered into a severance agreement           
          that would have subjected the taxpayer to an excise tax for                 
          parachute payments under section 4999 and his employer to a                 
          deduction disallowance under section 280G.  To avoid this result,           
          the taxpayer and his employer renegotiated the agreement to                 
          reduce the severance payment below the threshold level.  The                
          employer then agreed to use its best efforts to employ the                  
          taxpayer so as to make up the amount subtracted from the original           
          agreement.  In the end, the taxpayer received a bonus almost                
          equivalent to the reduction in the parachute payment.  The                  
          Seventh Circuit affirmed this Court, which found that the later             
          payment, negotiated after the change in control, was properly               
          considered as contingent on a change of control.  Cline v.                  
          Commissioner, supra at 485.                                                 
               On this record, we have no difficulty concluding that the              
          Retention Payments and the disputed 1991 SRP Benefits “would not            
          in fact have been made * * * had no change in ownership or                  
          control occurred.”  H. Rept. 98-861, supra at 851, 1984-3 C.B.              
          (Vol. 2) at 105.  The facts in this case are that Schneider had             
          no feasible alternative to retaining the Retained Executives in             
          order to protect its $2.25 billion investment in petitioner, that           






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