[Federal Register Volume 67, Number 120 (Friday, June 21, 2002)]
[Proposed Rules]
[Pages 42210-42211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15740]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-209114-90]
RIN 1545-AH49


Golden Parachute Payments; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correction to notice of proposed rulemaking and notice of 
public hearing.

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SUMMARY: This document contains corrections to a notice of proposed 
rulemaking and notice of public hearing that was published in the 
Federal Register on Wednesday, February 20, 2002 (67 FR 7630) that will 
clarify the application of section 280G of the Internal Revenue Code to 
deny a deduction to a corporation for any excess parachute.

FOR FURTHER INFORMATION CONTACT: Erinn Madden at (202) 622-6060 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The notice of proposed rulemaking and notice of public hearing that 
is the subject of these corrections are under section 280G of the 
Internal Revenue Code.

Need for Correction

    As published, the notice of proposed rulemaking and notice of 
public hearing (REG-209114-90) contains errors that may prove to be 
misleading and are in need of clarification.

Correction of Publication

    Accordingly, the publication of the notice of proposed rulemaking 
and notice of public hearing (REG-209114-90), which is the subject of 
FR Doc. 02-3819, is corrected as follows:
    1. On page 7630, column 1, in the preamble under the caption 
``SUMMARY:'', fourth line from the bottom of the paragraph, the 
language ``may rely on the 1989 regulations for any'' is corrected to 
read ``may rely on the 1989 proposed regulations for any''.
    2. On page 7630, column 2, in the preamble under the caption ``FOR 
FURTHER INFORMATION CONTACT:'', line 2, the language ``Madden at (202) 
622-6030 (not a toll'' is corrected to read ``Madden at (202) 622-6060 
(not at toll--''.
    3. On page 7630, column 2, in the preamble under the paragraph 
heading ``Background'', second paragraph, line 9, the language 
``section 312(v)(2)(A), which relates to'' is corrected to read 
``section 3121(v)(2)(A), which relates to the.''
    4. On page 7630, column 2, in the preamble under the paragraph 
heading ``Background'', second paragraph, line 14, the language ``FR 
19390 on May 5, 1989 (the 1989'' is corrected to read ``FR 19390 on May 
5, 1989 and corrected in 54 FR 25879 (June 20, 1989) (the 1989''.
    5. On page 7631, column 1, in the preamble under the paragraph 
heading ``Disqualified Individuals'', second paragraph, line 7, the 
language ``1989 regulations provides a de minimis'' is corrected to 
read ``1989 proposed regulations provides a de minimis''.
    6. On page 7634, column 2, in the preamble under the paragraph 
heading ``Reasonable Compensation'', first full paragraph from the top 
of the column, line 2 from end of paragraph, the language ``show to be 
reasonable compensation'' is corrected to read `` shown to be 
reasonable compensation''.
    7. On page 7635, column 3, in the preamble under the paragraph 
heading ``Timing of the Payment of Tax under Section 4999'', paragraph 
1, line 2, the language ``section 312(v) and Sec. 1.3121(v)-1(e)(4)'' 
is corrected to read ``section 3121(v) and Sec. 31.3121(v)(2)-
1(e)(4)''.
    8. On page 7635, column 3, in the preamble under the paragraph 
heading ``Proposed Effective Date'', line 4, the language ``control 
occurring on or after January 1,'' is corrected to read ``control that 
occurs on or after January 1,''.


Sec. 1.280G-1  [Corrected]

    9. On page 7638, column 2, Sec. 1.280G-1, paragraph (g) of A-6:, 
Example 4., line 10, the language ``application of the excemption 
described in'' is corrected to read ``application of the exemption 
described in''.
    10. On page 7638, column 2, Sec. 1.280G-1, paragraph (g) of A-6:, 
Example 5., line 9, the language ``pays or accrues a payment that 
would'' is corrected to read ``that would''.
    11. On page 7638, column 3, Sec. 1.280G-1, paragraph (b)(1) of A-
7:, line 9, the language ``A-7, the vote can be no less than the'' is 
corrected to read ``A-7, the vote can be on less than the''.
    12. On page 7640, column 1, Sec. 1.280G-1, paragraph (e) of A-7:, 
Example 7., line 16, the language ``the payments of $400,000 to X; 
$600,000 to'' is corrected to read ``and describing the payments of 
$400,000 to X; $600,000 to''.
    13. On page 7640, column 1, Sec. 1.280G-1, paragraph (e) of A-7:, 
Example 8., line 8, the language ``the nature of the payments to X, Y, 
and Z are'' is corrected to read ``the nature and amount of the 
payments to X, Y, and Z are''.
    14. On page 7641, column 1, Sec. 1.280G-1, paragraph (c) of A-11:, 
lines 18 and 19 from the top of the column, the language ``under 
section 3121(v) and Sec. 1.312(v)-1(c)(4) or payment related to 
health'' is corrected to read ``under section 3121(v) and 
Sec. 31.3121(v)(2)-1(e)(4) of this chapter, or a payment related to 
health''.
    15. On page 7641, column 2, Sec. 1.280G-1, paragraph (a) of A-13:, 
lines 13 and 14, the language ``value of an option with an 
ascertainable fair market value at the time the option'' is corrected 
to read ``value of an option at the time the option''.
    16. On page 7642, column 1, Sec. 1.280G-1, Q-17:, line 3, the 
language ``purposes of paragraph (a)(1) of Q/A-15'' is corrected to 
read ``purposes of paragraph (a)(1) and (b) of Q/A-15''.
    17. On page 7642, column 3, Sec. 1.280G-1, paragraph (c) of A-18:, 
line 16, the language ``defined in Q/A-20 of this section). If the'' is 
corrected to read ``defined in Q/A-20 of this section). The number of 
employees is determined with regard to the rules in Q/A-19(c). If 
the''.
    18. On page 7642, column 3, Sec. 1.280G-1, paragraph (a) of A-19:, 
line 13, the language ``A-21 of this section) paid during the'' is 
corrected to read ``A-21 of this section) earned during the''.
    20. On page 7644, column 1, Sec. 1.280G-1, paragraph (c) of A-22:, 
line 7, the language ``that is closely associated and materially'' is 
corrected to read ``that is closely associated with and materially''.

[[Page 42211]]

    21. On page 7646, column 3, Sec. 1.280G-1, paragraph (f) of A-24:, 
Example 4., line 3 from the bottom of the column, the language ``would 
been on January 15, 2011. The'' is corrected to read ``would have been 
on January 15, 2011. The''.
    22. On page 7648, column 1, Sec. 1.280G-1, paragraph (c) of A-26:, 
line 13, the language ``of section 129); or a no-additional-cost'' is 
corrected to read ``of section 129); a no-additional-cost''.
    23. On page 7648, column 1, Sec. 1.280G-1, paragraph (c) of A-26:, 
line 15, the language ``132(b)) or qualified employee discount'' is 
corrected to read ``132(b)) qualified employee discount''.
    24. On page 7648, column 1, Sec. 1.280G-1, line 16, the language 
``(within the meaning of section 132(c));'' is corrected to read 
``(within the meaning of section 132(c)) qualified retirement planning 
services under section 132(m);''.
    25. On page 7649, column 1, Sec. 1.280G-1, paragraph (d) of A-27:, 
Example 4., lines 11 through 22, the language ``Corporation P 
shareholders also owned Corporation O stock (overlapping shareholders) 
with a fair market value of 5 percent of the value of Corporation O 
stock. The overlapping shareholders consist of Mutual Company A Growth 
Fund, which prior to the transaction owns 3 percent of the value of 
Corporation O stock, Mutual Company A Income Fund, which prior to the 
transaction owns 1 percent of the value of Corporation O stock, and B, 
an individual who prior to the transaction owns 1 percent'' is 
corrected to read ``Corporation O shareholders also owned Corporation P 
stock (overlapping shareholders) exchanged for O stock with a fair 
market value of 5 percent of the value of Corporation O stock. The 
overlapping shareholders consist of Mutual Company A Growth Fund, which 
prior to the transaction owns P stock that is exchanged for 3 percent 
of the value of Corporation O stock, Mutual Company A Income Fund, 
which prior to the transaction owns P stock that is exchanged for 1 
percent of the value of Corporation O stock, and B an individual who 
prior to the transaction owns P stock that is exchanged for 1 percent''
    26. On page 7651, column 1, Sec. 1.280G-1, A-32:, line 12, the 
language ``24 and 35 of this section. However, for'' is corrected to 
read ``24 and 31 of this section. However, for''.
    27. On page 7655, column 1, Sec. 1.280G-1, paragraph (c) of A-42:, 
Example 3., line 4, the language ``services to Corporation N, when and 
if,'' is corrected to read ``services to Corporation N, when and if''.
    28. On page 7656, column 2, Sec. 1.280G-1, A-48: is corrected to 
read as follows:


Sec. 1.280G-1  Golden parachute payments.

* * * * *
    A-48: This section applies to any payments that are contingent on a 
change in ownership or control that occurs on or after January 1, 2004. 
Taxpayers can rely on these rules after February 20, 2002, for the 
treatment of any parachute payment.

Cynthia E. Grigsby,
Chief, Regulations Unit, Associate Chief Counsel, (Income Tax and 
Accounting).
[FR Doc. 02-15740 Filed 6-20-02; 8:45 am]
BILLING CODE 4830-01-P