7.1.19: The 'Golden Parachute' Rules

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Abstract

Introduction In 1984, Congress was concerned that executive termination payments (that is, payments due to an executive upon termination of employment, usually after the employer was acquired) had grown too large, and were inhibiting useful acquisitions as well as impoverishing shareholders. It decided to use the tax law as a means of reducing the amount of such payments. The result is now set forth in sections 280G and 4999 of the Internal Revenue Code--the "golden parachute" rules. The Treasury Department promulgated proposed regulations under sections 280G and 4999 in 1989. These were quite comprehensive, and, by default, remained the primary source of guidance for practitioners until a new set of proposed regulations was issued in 2002.[1] Now, the 2002 proposed regulations form the principal guidance for taxpayers. The 2002 proposed regulations are proposed to apply to any payments that are contingent on...

Sub-Topics

• 7.1.19.a: Misconceptions Regarding Golden Parachutes In An M&A setting: Who Really Gets The Soft Landing?