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IRS Finalizes Regulations under Section 162(m)

Client memorandum | December 28, 2020

The Tax Cuts and Jobs Act (the “Act”)--signed into law in December 2017--made several substantial changes to Section 162(m) of the Internal Revenue Code (“Section 162(m)”), which limits a publicly traded corporation’s business expense deductions for the compensation paid to its “covered employees.” The Internal Revenue Service published proposed regulations (the “Proposed Regulations”) regarding revised Section 162(m) on December 20, 2019, and released final regulations (the “Final Regulations”) on December 18, 2020.

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