[As reported by our Baker McKenzie Compensation colleagues]

As of December 20, 2017, both the House of Representatives and the Senate have voted to approve the final version of the Tax Cuts and Jobs Act, in substantially the form released by the Conference Committee on December 15th. The bill is expected to be presented to the President for signature before Christmas, making US tax reform a reality for 2018.

What’s In? From a Compensation & Benefits perspective, among other things, the approved bill includes:

  • Significant changes to Code Section 162(m);
  • A new tax deferral regime for options and RSUs granted by private companies;
  • Elimination of exclusion for fewer than expected employer-provided fringe benefits; and
  • Increased disallowance of compensation-related deductions under Code Section 274.

What’s Out? Fortunately, the final bill does not include a Senate proposal to require the use of a first-in-first-out (FIFO) methodology when calculating capital gains on sale of shares, nor does it add back any of the changes to non-qualified deferred compensation that were proposed in the initial House version of the bill. Also, most of the changes proposed to qualified retirement plans have been eliminated.

To learn more about the impact on your company, see our public and private company breakdown below:

Please contact your Baker McKenzie Compensation attorney with any questions related to the tax legislation.

And, for more information on the broader implications of the tax legislation on your company, please see Baker McKenzie Tax Practice Group’s client alerts: