Tax Management Compensation Planning Journal
"Deducting from Flexibility Under §162(m)—New Proposed Treasury Regulations Released,"
In general, §162(m) of the Internal Revenue Code of 1986, as amended (the Code) denies a deduction to public companies with respect to compensation in excess of $1,000,000 paid to persons who are, as of the last day of the company's taxable year, the chief executive officer or executive officers listed in the company's summary compensation table who are also among the three highest paid executive officers (other than a company's principal financial officer). One widely used exception under §162(m) is the exception for qualified 'performance-based' compensation (the 'Performance-Based Exception'). On June 24, 2011, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) proposed amendments to the regulations under §162(m) (the 'Proposed Regulations') relating to certain rules applicable to performance-based compensation.