Sections 280G & 4999 Of The Internal Revenue Code

Executive Compensation, Benefits & Bonuses

Change in control events can trigger executive severance payments that may fall under Internal Revenue Code Section 280G “golden parachute” provisions. Under section 280G, a company cannot deduct “excess parachute payments” made to “disqualified individuals.” If an executive becomes entitled to a golden parachute payment that exceeds a certain amount determined under Section 280G, the executive is personally liable for a nondeductible 20% excise tax on the amount of the excess imposed under IRC Sections 280G and 4999.

Outten & Golden attorneys draft and negotiate changes in control agreements and analyze severance packages triggered by Change in Control events. We also work with excellent tax counsel and accountants who assist executives in tax planning as it relates to 280G payments.