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evidence that any portion of those payments constituted
reasonable compensation for services to be rendered on or after
the change in ownership or control.33 Respondent does not
contest the deductibility as reasonable compensation of any other
payments received by the Retained Executives in 1992.
In deciding whether petitioner has shown that any portion of
the payments at issue constituted reasonable compensation for
purposes of section 280G(b)(4), we are faced with the threshold
question of the appropriate test or standard to use for assessing
the reasonableness of compensation. In Cline v. Commissioner,
34 F.3d 480 (7th Cir. 1994), the Court of Appeals for the Seventh
Circuit, to which an appeal in this case would ordinarily lie,
approved our use of a multifactor test as a means of determining
whether compensation is reasonable for purposes of section 280G.
More recently, however, the Court of Appeals rejected the use of
a multifactor test to determine reasonable compensation for
purposes of section 162(a)(1), holding that an “independent
33 Sec. 280G(b)(4) provides in part:
(4) Treatment of amounts which taxpayer
establishes as reasonable compensation.--In the case of
any payment described in paragraph (2)(A)--
(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
rendered on or after the date of the change
described in paragraph (2)(A)(i) * * *
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