Abstract
The Tax Cuts and Jobs Act (TCJA) made several changes to the rules affecting employee compensation for publicly held corporations and private companies. These changes include both good news and bad news. On the positive side, TCJA added a new provision under Internal Revenue Code (IRC) Section 83(i) allowing employees of private companies to make an election to defer the recognition of income for up to 5 years from certain stock options and restricted stock plans. Unfortunately, this good news is offset by the changes made to IRC Section 162(m) which limits deductibility of compensation in excess of $1 million for publicly traded corporations. The TCJA expanded the definition of employees who are subject to the $1 million limitation and the types of compensation affected, including repealing the performance‐based exception. As a result, the types of strategies that corporations used to avoid this deduction limit in prior years may no longer work. © 2019 Wiley Periodicals, Inc.
