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Tam Metin
Section 280G of the Internal Revenue Code imposes a tax on certain individuals who receive excess compensation contingent on a change in ownership or control of the company for which they work and denies a deduction for the compensation for the company paying the compensation. In PLR 9847011, the IRS considered a situation in which a parent corporation sold its wholly owned subsidiary, which accounted for less than 20% of the value of the parent, and in the same calendar year, all the stock of the parent was purchased by a second purchaser unrelated to the purchaser of the subsidiary. The executives of the subsidiary had agreements with the subsidiary to receive payments upon a change in the ownership or control of the subsidiary.
Within the same calendar year, the parent sold its wholly owned subsidiary to Purchaser 1. In connection with the sale, various agreements with executives of the subsidiary resulted in the payment to the executives of amounts that were triggered by their subsequent termination of employment. Later in that same year, an unrelated Purchaser 2 acquired all the stock of the parent. The subsidiary was sold for valid business reasons...