Companies are getting a little more clarity from the Internal Revenue Service about how to interpret provisions under tax reform affecting executive compensation.

The IRS issued Notice 2018-68 to provide “initial guidance” on Section 162(m) of the Internal Revenue Code as amended by the Tax Cuts and Jobs Act. 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 tax legislation said the $1 million deduction cap that already existed under Section 162(m) would be expanded to include additional “covered employees,” including the CFO and others who had previously been covered employees, even after they are separated from the company. It also expanded the definition of “public company” that would be affected by the provisions to include other securities registrants, such as foreign private issuers and private companies with certain registered debt offerings.

Perhaps most significantly, the new tax law eliminated the “qualified performance-based” exception that applied to the $1 million deductibility limit, meaning even performance-based pay would be subject to the deduction cap. Companies have long used performance-based arrangements like bonuses or stock options as part of their executive compensation packages, in part because of the way tax rules have been structured historically.

The IRS notice says the service has fielded plenty of questions about certain aspects of the executive compensation provisions, especially the rules for identifying covered employees and grandfathering provisions contained in the new tax law. The IRS says its newest notice, at 22 pages, is intended to answer those questions specifically, while additional issues will be addressed in proposed regulations.

The notice describes how the IRS is interpreting the tax law’s amendments to the definitions of a publicly held corporation, covered employees, and “applicable employee remuneration” as those terms are used in the legislation, as well as the grandfather rule. It also provides examples of scenarios that some taxpayers may face with conclusions on how the IRS would interpret the various facts.

The notice also addresses written binding contracts, material modifications to those contracts, and nearly a dozen examples to illustrate how guidance would be interpreted under various facts and circumstances.

The IRS is inviting further public comment on other aspects of Section 162(m) amendments, asking for input by Nov. 9.