IRS Aims to Curb Workaround of Limit on Executive Pay Tax Break

Public companies would have a harder time evading a stricter limit on deductions for compensation paid to top executives under an IRS proposal.

The proposed regulations (REG-122180-18) implement a 2017 tax law provision that expanded the scope of tax code Section 162(m), which prevents public companies from getting a tax deduction for executive compensation exceeding $1 million. The rules target a workaround under which corporations could potentially skirt the limit by paying certain top executives part of their compensation through a partnership.

“What this does is it takes away the ability to plan around 162(m)” using ...