Non-fixed Payments

(1) In the case of a non-fixed payment, no rebuttable presumption arises until the

exact amount of the payment is determined, or a fixed formula for calculating the payment is specified, and the three requirements to invoke the rebuttal presumption under Treas. Reg. 53.4958-6(a) are subsequently satisfied. See Treas. Reg. 53.4958-6(d)(1).

(2) Non-Fixed Payments Subject to a Cap - If the authorized body approves an

employment contract with a disqualified person that includes a non-fixed payment (such as a discretionary bonus) up to a specified cap, the authorized body may establish a rebuttable presumption as to the non-fixed payment when the employment contract is entered into if:

a. Before approving the contract, the authorized body obtains appropriate

comparability data indicating that a fixed payment of up to a certain amount to the disqualified person would represent reasonable compensation,

b. The maximum amount payable under the contract, considering both fixed

and non-fixed payments, doesn’t exceed the above amount, and

c. The requirements for the rebuttable presumption in Treas. Reg. 53.4958-6(a)

are satisfied. See Treas. Reg. 53.4958-6(d)(2).