Tax reform

IRS Issues New 162(m) Rules Related to Grandfathered Benefits under Deferred Compensation Plans.

Topics: 162(m), COLI/BOLI, Congress, NQDC, Tax reform

Changes to 162(m) made by the Tax Act expand the $1 million deduction limit for covered employees at public companies. NQDC amounts accrued as of November 2, 2017 can escape these expanded deduction limits if the NQDC amounts meet certain grandfather requirements to remain covered by the pre-Tax Act 162(m) rules (“old 162(m)”). The Notice…

Recent Trends in Litigation over Director Compensation Highlight Risks and Suggest Actions to Mitigate those Risks

Topics: COLI/BOLI, Congress, NQDC, Tax reform

Decisions about levels of director compensation often do not receive the protection of the business judgment rule because directors are usually interested in decisions about their own compensation levels. Under Delaware case law, however, stockholders face significant legal barriers in challenging these director compensation decisions if the stockholders previously approved the director compensation levels. These…

Performance Anxiety? A Look at Recent §162(m) Tax Reform

Topics: Tax reform

Effective January 1, 2018, the Tax Act amended the deduction limitations under Internal Revenue Code §162(m) for executive compensation. The specific changes include: (1) elimination of the “qualified performance-based” pay exception to the $1 million deduction limitation on compensation for “covered employees” and (2) expansion of the scope of §162(m) so that more companies and…

Legacy Planning Post-Tax Reform – Part 1: Let Me Count the Ways: 5 Questions for Non-Taxable Estates

Topics: Tax reform, Transfer taxes

The doubling of the federal gift, estate, and generation-skipping transfer (“GST”) tax exemptions ($11.18 million in 2018) has drastically reduced the number of individuals whose estates will incur a federal estate tax. Yet, potential estate tax exposure should not be the sole motivator for legacy and life insurance planning.

Decoding Tax Reform: Senate Passes Its Bill – What It Says & What’s Next?

Topics: Tax reform

Over the weekend, the Senate passed its version of the Tax Cut and Jobs Act (“Senate Bill”) making some significant last-minute changes from its prior mark-up (“Prior Senate Bill”), including (1) the retention of the individual and corporate alternative minimum taxes (“AMTs”), (2) an increase in the deduction for qualified business income from pass-through entities...