Section 162m

Code section 162 m will limit the deduction that covered companies may take for annual compensation paid to any individual who served as the ceo or cfo at any time during the taxable year and the three other most highly compensated officers other than the ceo and cfo for the taxable year.

Section 162m. Section 162 f of the internal revenue code of 1986 formerly i r c. Section 162 g of such code as added by subsection a shall apply with respect to amounts paid or incurred after december 31 1969. Section 162 m compensation deduction limitation section 162 m before the tax cuts and jobs act of 2017 under irc section 162 m of 1986 the deduction for a publicly held corporation for otherwise deductible compensation paid to a covered employee was limited to 1 million per year.

Section 162 c 1 of such code as amended by subsection b shall apply to all taxable years to which such code applies. Overview of section 162 m section 162 m which became effective in 1994 provides that a publicly traded corporation may not deduct compensation in excess of 1 million per year paid to any covered employee of the corporation. 115 97 significantly expanded the scope and application of the limitation.

The law known as the tax cuts and jobs act tcja p l. 162 m limits the compensation deduction a public corporation may take to 1 million per tax year for compensation paid to each of certain executive officers. Before the tcja was enacted in december 2017 the deduction limitation.