Paul L. Caron

Thursday, February 21, 2008

IRS Issues Guidance on § 162(m) Performance-Based Compensation

Following up on last week's post on PLR 200804004 (1/25/2008):  The IRS today released an advance copy of Rev. Rul. 2008-13, 2008-10 I.R.B. ___ (3/10/08):

The ruling holds that compensation paid to an executive is not qualified performance-based compensation for purposes of § 162(m), even if the compensation is paid upon the attainment of the performance goal, if the plan agreement or contract provides for payment of compensation to an executive upon the attainment of a performance goal or for (1) termination without “cause“ or for “good reason” or (2) voluntary retirement.

Although Rev. Rul. 2008-13 thus reaffrims the analysis in PLR 200804004, the new rule only applies prospectively.

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I can see all the "make work" client alerts from major law firms filling my in box, begging for the opportunity to have overworked, scatter brained associates exhaustively review all potentially affected employment agreements.

Posted by: guy in the veal calf office | Feb 22, 2008 2:31:43 PM