The IRS issued today long-awaited (see: "IRC Section 162(m) Guidance Slated) initial guidance on the application of IRC §162(m), as reconstituted under the Tax Cuts & Jobs Act. The guidance - which includes helpful examples - covers the amended definition of "covered employee" and remuneration provided pursuant to a written binding contract - in particular, the operation of the grandfather rule, including when a contract will be considered materially modified so that it is no longer grandfathered.
The Notice indicates that the new guidance will be incorporated in future regulations that - with respect to the issues addressed in the Notice - will apply to taxable years ending on or after September 10, 2018. It also includes a request for comments by November 9th on these additional issues that are anticipated to be subject to further guidance:
- Application of the definition of “publicly held corporation” to foreign private issuers, including the reference to issuers that are required to file reports under 15(d) of the '34 Act
- Application of the definition of “covered employee” to an employee who was a covered employee of a predecessor of the public corporation
- Application of 162(m) to corporations immediately after they become public either through an IPO or a similar business transaction
- Application of the SEC executive compensation disclosure rules for determining the three most highly compensated executive officers for a taxable year that does not end on the same date as the last completed fiscal year