On December 18, 2020, the Internal Revenue Service (“IRS”) issued final regulations (the “Final Regulations”) under Section 162(m) of the Internal Revenue Code (the “Code”), as amended by the 2017 Tax Cuts and Jobs Act (the “TCJA”). Section 162(m) limits the deductibility of compensation paid in any year to certain public company executives to $1 million. The Final Regulations provide further guidance on the TCJA’s amendments to Section 162(m) and are generally consistent with the IRS’ 2019 proposed regulations (the “Proposed Regulations”). Key changes from the Proposed Regulations and other clarifications are discussed in more detail below. The Final Regulations will apply to tax years beginning on or after December 30, 2020, with special applicability dates for specified provisions.
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