Trucker Huss APC is pleased to announce that director Marc Fosse has provided his insights in the Tax Notes article “Executive Comp Plans Merit Broad Relief, Practitioners Say” published February 12, 2018 by Stephanie Cumings.
The article discusses the views of tax practitioners and attorneys as they await clarity from the IRS on what executive compensation will still be deductible under the new tax law. The Tax Cuts and Jobs Act (P.L. 115-97) eliminated the deduction for performance- and commission-based compensation under section 162(m). One contributor notes that most executive compensation arrangements that qualify as performance-based compensation under the prior rules include some form of negative discretion, meaning the award can be reduced.
Fosse noted that in most cases, negative discretion doesn’t mean the executive can be paid nothing. “Usually, there are different thresholds that are performance- based, and there’s negative discretion to lower awards with a certain range,” Fosse said. “That’s why I think that in general, negative discretion would not mean that there’s no legally binding right.”
