Tax Reform Section 162(m) and Transition Guidance: Significant Impact on Executive Compensation
When President Trump signed into law the Tax Cuts and Jobs Act, it affected Section 162(m) of the Internal Revenue Code, which could drastically impact the way companies strategize their executive compensation programs. This amendment removes the tax benefit related to performance-based compensation, which could result to an increase in disallowed tax deductions. While the short and long-term implications of this amendment are still unclear, it’s imperative for companies to prepare for this new tax regime by putting in place some action items and planning considerations.
In this LIVE Webcast, a seasoned panel of thought leaders and professionals brought together by The Knowledge Group will provide and present an in-depth analysis of the fundamentals as well as recent developments in Tax Reform Section 162(m) and Transition Guidance. Speakers will also present its significant impact on executive compensation as well as the best practices in addressing relevant compliance issues.
Key topics include:
- Tax Reform Section 162(m) – An Overview
- Code Section 162(m) Transition Rule
- Potential Implications to Executive Compensation
- Analyzing Critical Issues and Challenges
- Risk Mitigation Strategies for an Effective Legal Compliance
SEGMENT 1: Lois Wagman Colbert, Partner
Kilpatrick Townsend & Stockton LLP
- Brief overview of Tax Reform’s 162(m) changes
- Notice 2018-68’s surprising new definition of “covered employees”
- The “always rule” for covered employees – what the notice says
- The notice’s effective date and relying on the notice pending future guidance
- What is not covered and what subject matter comments is the IRS seeking
SEGMENT 2: Mark D. Wincek, Partner
Kilpatrick Townsend & Stockton LLP
- Notice 2018-68’s 162(m) grandfather – The 162(m) grandfather from 1993 with updates
- The effect of negative discretion on the grandfather – an uphill battle, not a defeat
- Compensation grandfathered under employment agreements
- Grandfathering of stock options, SARs and other equity grants
- Deferred Compensation grandfathering – Which deferrals and earnings can avoid the $ 1 million cap?
- The effect of newly providing for the deferral of grandfathered compensation
- Material modifications that prematurely terminate grandfathering
- What to do now
SEGMENT 3: David Chang, CPA, President/Founder
Compensation & Benefits Advisory Services, LLC
- Tax Accounting, Deferred Tax Assets, and Effective Tax Rates
- Permanent loss of deduction for existing covered employees unless grandfathered
- Impact if executive becomes a covered employee
- Planning to avoid an executive becoming a covered employee
- Disincentive to retain executives who are covered employees
- M&A Transactions
- Interplay with Section 280G Golden Parachute Rules
- Lost deduction for target covered employees
- Disincentive to retain executives who are covered employees under predecessor company rules
- Deferred Compensation
- Loss of deductions even after separation
- Tracking grandfathered amounts
- Potential to further delay under 409A
- Tax efficient funding mechanisms (company stock, COLI, BOLI)
Who Should Attend:
- Labor and Employment Lawyers
- Employee Benefits & Compensation Lawyers
- Executive Compensation Advisors and Officers
- Human Resource Personnel
- Executive Board Members
- Tax Professionals
- Other Related/Interested Professionals
MARK D. WINCEK is the senior partner on Kilpatrick Townsend’s Employee Benefits Practice Group. His practice concentrates on executive compensation, qualified plans and fiduciary matters, and it encompasses counseling, transactions and controversies. Mr. Wincek has provided advice on 162(m) to a broad range of clients since its inception in 1993. Mr. Wincek is the author of the chapter on “SERPs and Excess Plans” in the BNA Books Section 409A Handbook, and his list of professional publications includes dozens of articles on compensation and benefits issues. In addition, Mr. Wincek is a former Adjunct Professor of Law at Georgetown University Law Center and a member of the Tax Section of the American Bar Association, where he was a lead author of the Compensation Subcommittee’s comments to the IRS on tax reform’s changes to 162(m). From 1976 to 1981, Mr. Wincek was on the staff of the U.S. House Ways and Means Committee, serving as Senior Subcommittee Counsel to the Ways and Means Oversight Subcommittee in 1980 and 1981.
MARK D. WINCEK is the senior partner on Kilpatrick Townsend’s Employee Benefits Practice Group. His practice concentrates on executive compensation, …
Lois Colbert is the leader of the Employee Benefits Practice Group of Kilpatrick Townsend. She engages in a comprehensive employee benefits practice with concentration in the areas of deferred compensation (including 409A compliance), retirement plan qualification (including drafting and obtaining Internal Revenue Service determination letters on tax-qualified status), equity compensation, fiduciary responsibility, prohibited transactions (including obtaining Department of Labor exemptions) and negotiation of employee benefit aspects of business transactions.
Ms. Colbert is a frequent speaker on various employee benefits and equity compensation topics. She has been an author or editor for each annual supplement to "Employee Benefits Law" from 2001 to 2010. Prior to joining the firm, she was associated with a law firm in Washington D.C., where she also concentrated in the area of employee benefits.
Ms. Colbert was listed as a North Carolina "Super Lawyer" in the area of Employee Benefits/ERISA Law in 2006 and 2011, and again in 2018 and the four years immediately preceding, by Super Lawyers magazine and in 2012, 2013 and 2017, she was named a North Carolina "Top 50 Women Super Lawyer" by Super Lawyers magazine. Ms. Colbert was recognized in The Best Lawyers in America® for Employee Benefits (ERISA) Law in 2018 and the five years immediately preceding. She was also named a 2014 "Charlotte Lawyer of the Year" in the area of Employee Benefits (ERISA) Law by The Best Lawyers in America®. Ms. Colbert was named one of "Charlotte's 50 Influential Women" in 2012 by The Mecklenberg Times. She was the recipient of Business Leader magazine's "2008 Movers & Shakers" award. Ms. Colbert was also recognized by the American Lung Association of North Carolina as its 2002-03 "Volunteer of the Year."
Lois Colbert is the leader of the Employee Benefits Practice Group of Kilpatrick Townsend. She engages in a comprehensive employee …
David Chang is the President and founder of Compensation & Benefits Advisory Services LLC (“CBAS”). He has been instrumental in consulting on the tax treatment, design, implementation and communication of non-qualified and equity-based compensation plans for a broad base of privately and publicly-held companies for almost 25 years. He focuses on FAS 123(R)/ASC 718 (share-based compensation); Internal Revenue Code Sections 162(m), 280G, and 409A (deferred compensation); ASC 740 (tax accounting); creating and reviewing processes and controls for compensation and benefits programs; payroll and benefits reconciliations; reasonable compensation analysis and litigation support services.
Prior to forming CBAS, David was a Managing Director at Golden Parachute Tax Solutions LLC, an accounting firm which offers Internal Revenue Code Section 280G Computations & Advisory Services, and a Managing Director of ExeComp Solutions LLC, a full service executive compensation consulting practice which works collaboratively with boards and management on executive compensation issues facing public and private companies and tax-exempt organizations.
David Chang is the President and founder of Compensation & Benefits Advisory Services LLC (“CBAS”). He has been instrumental in …
Print and review course materials
Method of Presentation:
On-demand Webcast; Group-Internet Based
Experience in employee benefits & compensation/tax laws
NASBA Field of Study:
Taxes - Technical
NY Category of CLE Credit:
Areas of Professional Practice
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About Kilpatrick Townsend & Stockton LLP
Kilpatrick Townsend is a multi-practice international firm with more than 600 attorneys and professionals, with 20 offices in the United States and abroad. The firm provides clients with unsurpassed legal representation in the following areas:
- Employee Benefits, Labor & Employment: Counseling, transactions, administrative advocacy, and litigation
- Business and Finance: Including securities, mergers and acquisitions, tax, and commercial transactions
- Intellectual Property: The full complement of IP procurement, counseling, and litigation
- Construction and Infrastructure: All aspects of transactions and litigation
- Litigation: Including insurance recovery, environmental, and complex business litigation
Kilpatrick Townsend serves clients around the world from the firm’s offices in Alaska, California, Colorado, District of Columbia, Georgia, New York, North Carolina, Texas, Washington, Shanghai, Stockholm, and Tokyo. The firm is committed to learning and furthering the business and legal goals of its clients.
About Compensation & Benefits Advisory Services, LLC
Compensation & Benefits Advisory Services, LLC (“CBAS”) is a boutique employee benefits consulting practice providing a wide array of business, tax, and accounting services to a broad range of employers (public and private companies and tax-exempt organizations across every industry on a national basis) with a particular emphasis on Golden Parachute Analysis and Planning, Executive Compensation Consulting, and Litigation Support. CBAS is committed to bringing the best value to its clients and offering a top-notch client service delivery model based on the expertise and guided by the principles and ethics of its President and Founder, David Chang. David has almost 25 years of intensive, relevant experience from working with two of the Big Four Accounting firms, a Fortune 100 company, and a boutique tax and executive compensation consulting practice. CBAS is a registered Certified Public Accounting firm.