Posts Categorized: Executive Compensation

House Ways and Means Committee Says, “Never Mind” to Repeal and Replace of Code Section 409A

in Executive Compensation, Section 409A, Tax Issues

By: Todd Castleton One week ago the Republicans’ Tax Bill H.R. 1, the “Tax Relief and Jobs Act,” was released. Section 3801 of that bill proposed to significantly curtail deferred compensation arrangements by replacing Internal Revenue Code section 409A with section 409B for all services performed on or after January 1, 2018. It would have also required all deferred compensation deferred before 2018 under current section 409A to be included in income no later than 2025. On November 9, 2017, House Ways and Means Committee Chairman Kevin Brady released an amendment striking these proposed changes. According to the summary released… Continue Reading

Tax Bill Compensation Changes – A Cause for Concern

in Executive Compensation, Section 409A, Tax Issues

The tax bill issued yesterday contains a number of provisions that, if implemented, will result in dramatic changes to the taxation of certain compensation arrangements.  Of particular concern: The performance-based compensation exception to the section 162(m) $1 million compensation deduction limitation would be eliminated, and the CFO would be added to the group of executives that are subject to the 162(m) limitation. Employer stock options would be treated as deferred compensation and taxable at vesting. Section 409A would be repealed and replaced by Section 409B, which generally would provide for taxation of deferred compensation at vesting, generally effective for deferred… Continue Reading

IRS Eliminates One of the Section 83(b) Filing Requirements

in Executive Compensation, Tax Issues

If an individual makes a Section 83(b) election to include in income the value of unvested property (such as restricted stock) that is transferred in connection with the performance of services, the individual must file the Section 83(b) election statement with the IRS no later than 30 days after the date the property is transferred.  However, under final regulations recently issued by the IRS, the individual no longer has to file a copy of the Section 83(b) election statement with his or her income tax return for the year of transfer.  These final regulations apply to property transferred on or… Continue Reading

IRS Issues Proposed Regulations under Sections 457(f) and 409A

in Executive Compensation, Section 409A, Tax Exempt Entities, Tax Issues

On June 22, 2016, the IRS issued long-awaited proposed regulations on Section 457(f) plans, as well as additional proposed regulations under Section 409A.  As expected, the Section 457(f) rules have many similarities to the existing Section 409A rules; however, there are some welcome differences including the possibility of a noncompete agreement creating a substantial risk of forfeiture for purposes of Section 457(f).  While the proposed rules under Section 409A include several welcome clarifications, changes to the proposed income inclusion regulations narrow the ability to make changes to unvested benefits.

IRS Proposes Change to Section 83(b) Election Requirements

in Executive Compensation, Tax Issues

The IRS has issued proposed regulations to eliminate the requirement that a taxpayer include a copy of a Code Section 83(b) election with his or her income tax return for the year of the election. This was done to facilitate e-filings of tax returns that were previously unavailable to taxpayers who made Section 83(b) elections because of the requirement to submit a copy of the election with the return. A taxpayer will still be required to mail a copy of the Section 83(b) election to the IRS within 30 days after making the election, as well as retain a copy… Continue Reading