Sections 162(m)(5) and 280G(e) of the Internal Revenue Code, added by the bailout legislation, limit the deductibility of compensation paid to certain corporate executives and provide that a corporate executive’s excess parachute payments are not deductible and are subject to an excise tax. These rules apply to employers who sell troubled assets. Notice 2008-94 contains a Q&A dealing with Sections 162(m)(5) and 280G(e).
- Section 162(m)(5): Clarification regarding applicable employers, applicable tax years, covered executives, application to acquisitions, deferred deduction executive remuneration, etc.
- Section 280G(e): Clarification regarding applicable severance from employment, parachute payments, consequences of such payments, etc.