2/29/2008: New IRS Position on Section 162(m) Performance-Based Compensation Deduction (Kirkpatrick & Lockhart Preston Gates Ellis LLP)
Excerpt: "In a surprisingly swift and unexpected turn of events, the Internal Revenue Service (IRS) has reversed its long-standing position with respect to a public company's right to deduct certain 'performance-based compensation' under Section 162(m) of the Internal Revenue Code. Revenue Ruling 2008-13, issued by the IRS on February 21, 2008, provides that the performance-based compensation requirements of Section 162(m) are not met if compensation could be payable on a termination without cause or for good reason, or on a voluntary retirement, even if the applicable performance goals are met. This Ruling is directly counter to the IRS's position in prior private letter rulings issued as recently as 2006."
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