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the service provider does not receive compensation for its
services within a “brief period of time” after the end of the
payor’s taxable year in which the services are performed. Sec.
1.404(b)-1T, Q&A-2(a), Temporary Income Tax Regs., supra. An
arrangement is presumed to defer the receipt of compensation for
more than a brief period of time when compensation is received by
the service provider more than 2-1/2 months after the end of the
payor’s taxable year in which the services are performed. Id.
Q&A-2(b)(1). This presumption may be rebutted only upon a
showing by a preponderance of the evidence that: (1) It was
“impracticable, either administratively or economically,” to
avoid the deferral of the service provider’s receipt of the
compensation beyond the 2-1/2-month period, and (2) as of the end
of the payor’s taxable year, this impracticability was
unforeseeable. Id. Q&A-2(b)(2).
3 (...continued)
limited partnership that uses the accrual method of
accounting may not accrue deductions for compensation
owed to cash-method taxpayers, who perform services for
the partnership, until the partnership taxable year in
which such compensation is paid. * * * [H. Rept.
98-432 (Part II), at 1283 (1984).]
The conference committee also reiterated the view that sec. 404
applies broadly to deferred compensation payments, stating that a
deferred compensation arrangement under sec. 404(b) “includes all
compensation, fee, and similar payments, however denominated,
except those which are specifically exempted.” H. Conf. Rept.
98-861, at 1160 (1984), 1984-3 C.B. (Vol. 2) 1, 414.
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