The IRS issued final regulations on Sec. 162(m), which disallows a deduction by any publicly held corporation for employee remuneration paid to any covered employee to the extent that the employee’s remuneration for the tax year exceeds $1 million.
The 2017 Tax Cuts and Jobs Act (TCJA) amended Sec. 162(m), changing the definition of covered employees, broadened which publicly held corporations are subject to the law, and eliminated the exception from the $1 million limit for remuneration payable on a commission basis and qualified performance-based compensation.
The new, final rules (T.D. 9932) address the definition of “publicly held corporation,” who is a covered employee, applicable employee remuneration inclusions, the application of Sec. 162(m) to privately held corporations that become publicly held and more.