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IRS Issues Proposed Regulations Under Code Section 162(m)

The 2017 Tax Cuts and Jobs Act (TCJA) significantly amended Internal Revenue Code Section 162(m), which generally disallows the deduction of compensation in excess of $1 million paid by a “publicly held corporation” to a “covered employee” in any single taxable year.

The Internal Revenue Service has now released proposed regulations under Section 162(m) (Proposed Regulations) (available here), which address and elaborate on the TCJA changes to Section 162(m), including the expansion of the definitions of “publicly held corporation” and “covered employee”; the elimination of the exception to Section 162(m) for performance-based compensation; and application of the grandfather rule to arrangements in effect on November 2, 2017, which are not materially modified.

Read more at Wilmer Hale

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