Companies have a little more clarity from the Internal Revenue Service about how to interpret provisions under tax reform affecting executive compensation.
On Dec. 20, the Treasury Department and the IRS published long-awaited proposed regulations under Section 162(m) of the Internal Revenue Code, clarifying and expanding upon the new framework for the deductibility of executive compensation by public companies introduced by the Tax Cuts and Jobs Act (TCJA). The massive tax law enacted at the end of 2017 provided, among other things, new rules governing the deductibility of compensation paid to top executives of publicly held companies. The IRS previously issued Notice 2018-68 to provide “initial guidance” on Section 162(m) of the Internal Revenue Code as amended by the TCJA.
