- 62 -
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
Page: Previous 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 NextLast modified: May 25, 2011