New Senate Finance Committee Proposals Significantly Curtail Deferred Compensation

On January 17, 2007, the New York office authored an Alert Memorandum entitled, “New Senate Finance Committee Proposals Significantly Curtail Deferred Compensation.” The Alert memo discusses the Senate Finance Committee unanimous approval of the Small Business and Work Opportunity Act of 2007, which includes proposals that would (i) significantly curtail any employee’s ability to defer compensation in excess of $1,000,000 per year and (ii) apply the Section 162(m) $1,000,000 deduction limitation to payments made to a “covered employee” even after such individual ceases to serve in that capacity. The attached memorandum summarizes these proposals. Copies of the proposals as they appear in the Joint Committee on Taxation, Description of the Chairman’s Modification of the Provisions of the “Small Business and Work Opportunity Act of 2007” (JCX-5-07) January 17, 2007, are also attached.