Trent Dykes and Kerra Melvin
Selling your company can be an exciting and overwhelming process. In addition to the complexity of negotiating the terms of your merger or asset sale, you will inevitably be bombarded with tons of deal-related jargon. Enter one such term, Internal Revenue Code (IRC) Section 280G (280G) or the “golden parachute payment” rules, a federal tax provision that comes into play when there is a change in control of a corporation. 280G impacts both the corporate entity and its executives, shareholders, and other “highly compensated individuals” associated with the corporation and imposes harsh tax consequences if not properly addressed. This post will provide a high-level summary of 280G, discuss when 280G applies, ways to avoid 280G liability, and how to calculate individual tax liability (under IRC § 4999) if 280G does apply.
Continue Reading Understanding Section 280G and Golden Parachute Payments