Key tax provisions of the Emergency Economic Stabilization Act of 2008.
Mondaq Business Briefing › Nbr. 2008, March 2008
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Troubled Assets Relief Program
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Key tax provisions of the Emergency Economic Stabilization Act of 2008.
Although the key feature of the Emergency Economic Stabilization Act of 2008 (Act) is the establishment of the Troubled Assets Relief Program (TARP) to restore liquidity and stability to the financial system, the Act as signed into law also contains many important tax provisions. In this alert, members of Foley's Tax & Employee Benefits Practice summarize the key tax provisions of the Act, as interpreted by United States Department of the Treasury in Notice 2008-94.
Tax Treatment of Executive Compensation for Participating TARP Entities The Act includes rules that modify the tax treatment of executive compensation paid by institutions that participate in TARP. These tax provisions are in addition to direct restrictions on executive compensation paid by such participants and apply only if the taxpayer (hereinafter, "a participating institution") is a member of a controlled group of corporations or commonly controlled businesses that sells (in the aggregate) more than $300 million of troubled assets to the government. In determining whether a controlled group has reached the $300 million threshold, the Act excludes direct sales to the government; however, this exclusion only applies if direct sales are the only means by which the group's troubled assets are acquired by the government. Limits on Deductibility of Compensation The Act expanded Section 162(m) of the Internal Revenue Code (Section 162(m)), which generally places a $1 million limitation on the deducti...See the full content of this document
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