Early in the morning on Saturday, December 2, 2017 (it was nearly 2 AM Eastern!), the Senate voted 51-49, drawn mostly along party lines, to pass its version of the tax reform bill described in our previous blog posts Thanksgiving Tax Frenzy – New Tax Bill Proposes Executive Compensation Changes That Could Derail Deferred Compensation and Stock Options on November 14 and Startups Have Much To Be Thankful For – Senate Amendments to New Tax Bill Remove Deferred Compensation and Stock Options from Endangered Species List on November 16. Members of the Senate had only a few hours to review what was deemed to be the final version of the Senate’s bill (which, interestingly, had edits hand-written in the margins), before the vote was held. Should the Tax Cuts and Jobs Act become law, it would represent the largest reform of the Internal Revenue Code since 1986.
The Senate version of the bill remains largely the same as what was previously proposed regarding executive compensation issues (e.g., gain deferral for qualified equity grants; limitations on deductions for compensation paid to certain executive employees, and elimination of exceptions for commissions and performance-based compensation; continues to omit any changes to the deferred compensation tax laws), and largely follows the House’s version of the bill except that the Senate version would no longer repeal the alternative minimum tax, but would raise the AMT exemption and exemption phase-out amounts for individuals until January 1, 2026. Given that there are not many differences between the two bills regarding executive compensation matters, it is likely that we will see these measures become law if and when the Senate and the House reconcile their two versions into a single bill.
We continue to monitor the status of the Tax Cuts and Jobs Act as the House and Senate move closer and closer to reconciling their versions of the bill.