IRC Section 162(m)

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On Friday, December 15, 2017, Congress put forth a final version of the Tax Cuts and Jobs Act, which would signify the largest piece of tax legislation in over thirty years if signed into law. Early in the morning on December 20, the Senate voted to pass the bill, and the House later approved it on the same day. The bill is on its way to President Trump’s desk, and most expect the bill to be signed into law when he receives the package just in time for Christmas. So what does this mean from an executive compensation standpoint?
Continue Reading The President Receives an Early Christmas Present: Congress Approves Landmark Tax Bill – What Will this Mean for Executive Compensation?

As an update to our previous blog post entitled, Senate Stays Up Late to Approve Tax Bill, dated December 5, 2017, the Senate and the House appear to have come to an agreement on the final version of the tax bill that will be voted on by Congress. While nothing official has been stated or released regarding the final bill, word from the latest news outlets revolves mostly around changes to corporate and individual tax rates. One interesting thing to note is that the current agreement would allegedly repeal the corporate alternative minimum tax, which was reflected in the Senate’s final version of their bill. For a review of the differences regarding executive compensation matters between the Senate and House versions of the bills, please refer to our original blog posts entitled  Thanksgiving Tax Frenzy – New Tax Bill Proposes Executive Compensation Changes That Could Derail Deferred Compensation and Stock Options on November 14 and Startups Have Much To Be Thankful For – Senate Amendments to New Tax Bill Remove Deferred Compensation and Stock Options from Endangered Species List on November 16. 
Continue Reading Congressional Republicans Reach a Deal on Tax Bill

Early in the morning on Saturday, December 2, 2017 (it was nearly 2 AM Eastern!), the Senate voted 51-49, drawn mostly along party lines, to pass its version of the tax reform bill described in our previous blog posts Thanksgiving Tax Frenzy – New Tax Bill Proposes Executive Compensation Changes That Could Derail Deferred Compensation and Stock Options on November 14 and Startups Have Much To Be Thankful For – Senate Amendments to New Tax Bill Remove Deferred Compensation and Stock Options from Endangered Species List on November 16. Members of the Senate had only a few hours to review what was deemed to be the final version of the Senate’s bill (which, interestingly, had edits hand-written in the margins), before the vote was held. Should the Tax Cuts and Jobs Act become law, it would represent the largest reform of the Internal Revenue Code since 1986.
Continue Reading Senate Stays Up Late to Approve Tax Bill

As discussed in our November 14, 2017 blog post, Thanksgiving Tax Frenzy – New Tax Bill Proposes Executive Compensation Changes That Could Derail Deferred Compensation and Stock Options, the evolution of the Tax Cuts and Jobs Act bill in both the House and the Senate is very fluid. No sooner had we posted the previous entry when the Senate had modified its Chairman’s Mark on November 14, 2017. Start-ups and other entities granting executive compensation will have much to be thankful for because of this latest markup. This update reflects the state of the tax bills through November 15, 2017.
Continue Reading Startups Have Much To Be Thankful For – Senate Amendments to New Tax Bill Remove Deferred Compensation and Stock Options from Endangered Species List

Congress has been in a frenzy to try and get new tax legislation passed by Thanksgiving, and members of the House and Senate would presumably rather be enjoying a feast rather than drafting and analyzing additional tax provisions when Turkey day rolls around. This blog addresses the executive compensation related provisions in the proposed new tax legislation which is likely to be voted on in the very near future.
Continue Reading Thanksgiving Tax Frenzy – New Tax Bill Proposes Executive Compensation Changes That Could Derail Deferred Compensation and Stock Options

In accordance with its 2010-2011 Priority Guidance Plan, the Internal Revenue Service published in the June 24, 2011 Federal Register proposed regulations (the “Proposed Regulations”) covering certain aspects of Internal Revenue Code Section 162(m).
Continue Reading New Internal Revenue Code Section 162(m) Proposed Regulations Take Surprising Position on Restricted Stock Unit Grants

 

On February 21, 2008, the Internal Revenue Service (“IRS”) released Revenue Ruling 2008-13, which confirms and expands upon the position taken in Private Letter Ruling (“PLR”) 200804004 that compensation intended to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), will not be exempt from the $1 million deduction limit if such compensation may be paid upon a covered executive’s involuntary termination without cause by the employer, the executive’s termination for good reason or the executive’s retirement.

Continue Reading IRS Confirms Significant Change in the Landscape of 162(m) Performance-Based Compensation Arrangements

On January 25, 2008, the Internal Revenue Service (“IRS”) released Private Letter Ruling (“PLR”) 200804004. This new PLR has apparently reversed an important position that served as guidance to public companies and practitioners regarding the tax deductibility of certain performance-based pay under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). For background, Code Section 162(m) generally limits the ability of public companies from deducting compensation in excess of $1 million paid to certain executive officers. However, compensation that meets the requirements of “performance-based compensation” is exempt from the $1 million limit under Code Section 162(m). Generally, compensation qualifies as performance-based only if it is payable when predetermined performance objectives are actually achieved in accordance with performance criteria that has been approved by shareholders. The regulations under Code Section 162(m) provide that compensation does not fail to qualify as performance-based merely because compensation is payable upon death, disability or a change in ownership or control.Continue Reading Significant Change in the Landscape of 162(m) Performance-Based Compensation Arrangements