“To amend the Internal Revenue Code of 1986 to expand the denial of deduction for certain excessive employee remuneration, and for other purposes.”
No CRS summary available for this bill.
This section expands the corporate deduction disallowance for remuneration exceeding $1 million under IRC §162(m) (i.e., limits deductions for applicable remuneration paid by publicly held corporations to covered executives), effective for taxable years beginning after December 31, 2024. Specifically, the section (1) replaces references to "covered employee" and "employee" with "covered individual" and "individual," and redefines covered individual to include any individual performing services (directly or indirectly) for the corporation (or predecessor) in taxable years beginning after December 31, 2020, or any employee who was the principal executive officer, principal financial officer (or acting in such capacity), or among the three highest compensated officers required to be reported to shareholders under the Securities Exchange Act for taxable years beginning after December 31, 2016, and before January 1, 2021; (2) modifies the definition of publicly held corporation to include any corporation required to file reports under Section 15(d) of the Securities Exchange Act (15 U.S.C. §78o(d)) at any time during the three-taxable-year period ending with the taxable year at issue; and (3) directs the Secretary of the Treasury to issue regulations as needed, including for reporting and to prevent avoidance through pass-through entities or other means. (Thus, the changes substantially broaden the executives, contractors, and other service providers subject to the deduction limit and the corporations affected.)