SW Benefits Update - The IRS’ Initial 162(m) Transition Guidance is Finally Here


On August 21, 2018, the IRS released Notice 2018-68 (“Notice”) providing its initial guidance on the Tax Cuts and Jobs Act (“Act”) transition rule for changes made to Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”). As we described in a prior SW Benefits Update, before the Act, Section 162(m) prohibited a public company from deducting annual compensation paid to its “covered employees” (before the Act, the chief executive officer and the company’s next three highest paid officers (other than its chief financial officer)) in excess of $1 million, unless the compensation paid qualified for the “performance-based compensation” exception to Section 162(m). 

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