280G (Gaolden Parachute) Calculation

[Guest Ronald A. Kladder]

Executives of Corporation A each have change in control agreements promising parachute payments equal to the lesser of an array of benefits or the maximum amount that may be paid without triggering the excise taxes under 280G. These amounts are payable if, for example, the covered executive is terminated without cause within 24 months afer the change in control occurs. A change in control occurs January 1, 2001 but the covered executives are not terminated. A second change in control occurs July 1, 2001 (the second acquirer is not related to the first acquirer or the first seller) immediately after which the covered executives are terminated without cause. Under the agreements, the executives are entitled to two parachute payments (sloppy drafting). But, are there two 280G calculations, effectively entitling the executives to two 280G limits?

[Guest Harry O]

No.

You should look at some recent PLRs. I recall that within the past 24 months the IRS issued some PLRs on how to work your way through the 280G calculation where there has been two changes in control (e.g., is present value calculated at the first CIC or the second CIC).