Tax reform readiness: Initial guidance on new executive compensation deduction limits

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September 2018

Overview

The 2017 tax reform act (the Act) includes new rules limiting the Section 162(m) deduction for executive compensation. The IRS recently issued Notice 2018-68, the first guidance under revised Section 162(m).

PwC on September 26 hosted a webcast featuring PwC specialists who discussed some of the key issues regarding the new guidance. This Insight highlights those discussions. Watch the webcast replay and register for future webcasts in PwC’s Tax Reform Readiness series, which addresses other areas affected by tax reform.

The next webcast — Tax reform readiness: Q3 financial reporting considerations — will take place on Wednesday, October 3, from 2:00 PM - 3:00 PM (EDT).

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The takeaway

One key takeaway from the webcast revolves around ‘tracking.” More specifically, companies should be tracking:

  • Covered employees, and reevaluating their list every year, based on roles and compensation over the complete year, not just the last day of the year or the proxy disclosures
  • Written binding contracts and amounts paid under them
  • DTAs for compensation recorded prior to the tax law change that are eligible for grandfathering vs DTAs for compensation recorded after the tax law change that may not be eligible for grandfathering and that is subject to the new Section 162(m) limitation.

Companies also should consider whether they could be affected by issues left unanswered by the Notice, and whether they should submit comments to the IRS requesting guidance on those issues.

Contact us

Craig O’Donnell

Workforce of the Future, Rewards and Well-Being Leader, PwC US

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