Now that we have had a couple of weeks to digest the IRSâs guidance in Notice 2018-68 on the Tax Cuts and Jobs Actâs (TCJAâs) amendments to Code Section 162(m), itâs a good time to take a closer look at the âgrandfatheringâ rule. As a reminder, the TCJA (i) eliminated the âperformance-based compensationâ exception to Section 162(m)âs $1 million limit on the deductibility of covered employee compensation, (ii) expanded and made permanent the group of…
Last week, the IRS issued Notice 2018-68 containing initial guidance on the amendments to section 162(m) made by the Tax Cuts and Jobs Act (âTCJAâ), including the transitional relief for written binding contracts. On balance, the guidance is not particularly favorable to taxpayers, as it takes a narrow view of the grandfathering relief for arrangements in effect under prior law, particularly for arrangements with negative discretion, and a broad view of the new group of…