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the compensation paid with respect to the services rendered in a
given taxable year.
In December 1992, petitioner paid Retention Payments and
1991 SRP Benefits to the Retained Executives totaling
$15,867,291. Of this amount, petitioner deducted $10,384,490--
consisting of the total44 of the 1991 SRP Benefits payments and
related interest paid to the Retained Executives in 1992
($4,191,053), plus that portion of the aggregate Retention
Payments paid in 1992 with respect to which petitioner took the
position that “economic performance” (within the meaning of
section 461(h)) had occurred in 1992 ($6,193,437).45 The
remaining $5,482,801 in Retention Payments paid in 1992 was
deferred, according to petitioner, pursuant to section 461(h) and
deducted ratably in petitioner’s 1993, 1994, and 1995 taxable
years.
Having thus taken the position that $10,384,490 in Retention
Payments and 1991 SRP Benefits was earned by the Retained
Executives in 1992, it is incumbent upon petitioner in our view
to demonstrate clearly and convincingly that these amounts, when
44 Petitioner contends that the entire 1991 SRP Benefits
payment (plus interest) was deductible when paid in 1992 because,
unlike the Retention Payments, such amount was not subject to
clawback.
45 Petitioner has also stipulated that the amount of the
Retention Payments and 1991 SRP Benefits that was earned by the
Retained Executives in 1992 was $10,384,490.
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