Section 162 M

Section 162 m compensation deduction limitation section 162 m before the tax cuts and jobs act of 2017 under irc section 162 m of 1986 the deduction for a publicly held corporation for otherwise deductible compensation paid to a covered employee was limited to 1 million per year.

Section 162 m. Before the tcja was enacted in december 2017 the deduction limitation. Proposed regulations under section 162 m were published in the federal register on december 20 1993 58 fr 66310 1993 proposed regulations. Tax code 162 m deductibility of executive compensation tax code 162 m deductibility of executive compensation section 162 m of the irs code places a 1 million dollar limit on the amount of deductible compensation that a company can pay to their ceo cfo and other three most highly paid executives.

162 m limits the compensation deduction a public corporation may take to 1 million per tax year for compensation paid to each of certain executive officers. Section 162 m was added to the code by section 3211 a of the omnibus budget reconciliation act of 1993 public law 103 66. Overview of section 162 m section 162 m which became effective in 1994 provides that a publicly traded corporation may not deduct compensation in excess of 1 million per year paid to any covered employee of the corporation.

Section 162 m was enacted in 1993 and limits the deductibility of compensation paid by publicly traded corporate employers to co vered employees. 1954 as added by subsection a shall apply to all taxable years to which such code applies. Code section 162 m will limit the deduction that covered companies may take for annual compensation paid to any individual who served as the ceo or cfo at any time during the taxable year and the three other most highly compensated officers other than the ceo and cfo for the taxable year.

Section 162 g of such code as added by subsection a shall apply with respect to amounts paid or incurred after december 31 1969. Section 162 c 1 of such code as amended by subsection b shall apply to all taxable years to which such code applies. The law known as the tax cuts and jobs act tcja p l.

115 97 significantly expanded the scope and application of the limitation.