Severance pay in corporate transactions
Article Abstract:
Corporate deductions of severance payments to employees may vary with transactional conditions. Who is entitled to IRC section 263 capitalization or section 162 current deductions of the value of payments may be an issue. The IRS has applied the U.S. Supreme Court origin of the claim test in INDOPCO v. Commissioner to compensation costs and has found costs deductible where they originate in the employment relationship. Transactions should be structured and documented with deductibility concerns in mind.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1998
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Extraordinary dividend applied to repay ESOP debt not deductible under Section 404(k)
Article Abstract:
IRC 404(k) permits the deduction of dividend payments for employer securities if they are used to pay employee stock ownership plan (ESOP)-related debt. Tax Advice Memorandum 9304003 held that the repurchase of 90% of ESOP stock was a nonrecurring corporate transaction resulting in an unusually high dividend. This could not be deducted under IRC 404(k) since the legislative history of that code section required that the dividend be reasonable, or similar to what an ESOP sponsor might regularly pay.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1993
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Amendment to s. 83 regulations eliminates requirement that employers withhold tax in order to take deduction
Article Abstract:
Proposed IRS regulations release under IRC section 83 will relieve employers of the requirement that income tax withholdings must be made before any deductions for the cost of those services are made. Instead, the employee will be allowed to simply report payment for services on a Form W-2 or Form 1099. Other withholding requirements may still apply, but for some service recipients that would be otherwise exempt, these amendments to the law will make compliance much less burdensome.
Publication Name: Tax Management Compensation Planning Journal
Subject: Law
ISSN: 0747-8607
Year: 1995
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