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10 Keys to Proposed Regulations Under Section 4960 (Executive Compensation for Tax-Exempt Organizations and their Affiliates)

By Amanda H. Nussbaum, James Huffman, Katrine Magas & Seth Safra on July 28, 2020
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Employers that are tax-exempt or have tax-exempt affiliates (for example, a foundation) should pay close attention to a 21% excise tax under Section 4960 of the Internal Revenue Code on certain executive compensation.  Proposed Regulations under Section 4960 are described here.  The discussion includes traps for the unwary.  Please reach out to your Proskauer contact to discuss how these rules affect your organization.

Photo of Amanda H. Nussbaum Amanda H. Nussbaum

Amanda H. Nussbaum is a partner in the Tax Department and also is a member of the Private Investment Funds Group. Her practice concentrates on planning for and the structuring of domestic and international private investment funds, including venture capital, buyout, real estate…

Amanda H. Nussbaum is a partner in the Tax Department and also is a member of the Private Investment Funds Group. Her practice concentrates on planning for and the structuring of domestic and international private investment funds, including venture capital, buyout, real estate and hedge funds, as well as advising those funds on investment activities and operational issues. She also represents many types of investors, including tax-exempt and non-U.S. investors, with their investments in private investment funds.Business partners through our clients’ biggest challenges, Amanda is a part of the Firm’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team helping to shape the guidance and next steps for clients impacted by the pandemic.

Amanda has significant experience structuring taxable and tax-free mergers and acquisitions, real estate transactions and stock and debt offerings. She also counsels both sports teams and sports leagues with a broad range of tax issues.

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Photo of James Huffman James Huffman

James Huffman is an associate in the Tax Department and a member of the Employee Benefits & Executive Compensation Group.

James counsels public and private companies on their employee benefits plans and executive compensation arrangements.  This includes counseling clients on compliance with ERISA…

James Huffman is an associate in the Tax Department and a member of the Employee Benefits & Executive Compensation Group.

James counsels public and private companies on their employee benefits plans and executive compensation arrangements.  This includes counseling clients on compliance with ERISA, the Internal Revenue Code, and securities laws, both in day-to-day administration and in transactions (including mergers and acquisitions and financing transactions).  In the employee benefit plan space, James provides advice on the full lifecycle of a plan, from its inception and administration to its termination.  He also represents clients before the IRS and other government agencies in connection with these matters.  James’s practice also includes advising clients in connection with distressed multiemployer pension plans.

In the executive compensation space, James works with both companies and executives in negotiating employment and separation agreements.  With experience working on both sides, James approaches negotiations with a holistic view of the issues and a focus on reaching an efficient and fair resolution.  He also collaborates with companies in designing and implementing annual and long-term cash and equity incentive compensation programs, and in complying with related securities disclosure obligations.

James earned his B.A. and J.D. from the University of Maryland, where he was senior articles editor of the Journal of Health Care Law and Policy, and earned his LL.M. in taxation with a certificate in employee benefits from Georgetown University Law Center.

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Photo of Katrine Magas Katrine Magas

Katrine Magas is an associate in the Tax Department and a member of the Employee Benefits & Executive Compensation Group. Katrine has extensive experience with executive compensation, equity compensation and tax-qualified plans, as well as compliance with Internal Revenue Code Sections 162(m), 280G…

Katrine Magas is an associate in the Tax Department and a member of the Employee Benefits & Executive Compensation Group. Katrine has extensive experience with executive compensation, equity compensation and tax-qualified plans, as well as compliance with Internal Revenue Code Sections 162(m), 280G and 409A. Before joining Proskauer, she worked in Ernst & Young’s People Advisory Services, Reward group, focusing on executive compensation and global equity matters arising in financial services organizations.

Following law school, Katrine served as a judicial law clerk for Justice Nancy M. Saitta of the Supreme Court of Nevada.

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Photo of Seth Safra Seth Safra

Seth J. Safra is a partner in Proskauer’s Employee Benefits & Executive Compensation Group. Described by clients as “extremely knowledgeable, practical, and strategic,” Seth advises clients on compensation and benefit programs.

Seth’s experience covers a broad range of retirement plan designs, from traditional…

Seth J. Safra is a partner in Proskauer’s Employee Benefits & Executive Compensation Group. Described by clients as “extremely knowledgeable, practical, and strategic,” Seth advises clients on compensation and benefit programs.

Seth’s experience covers a broad range of retirement plan designs, from traditional defined benefit to cash balance and floor-offset arrangements, ESOPs and 401(k) plans—often coordinating qualified and non-qualified arrangements. Seth also advises on ERISA compliance for investments, including the U.S. Department of Labor’s new conflict of interest (fiduciary) rules.

On the health and welfare side, Seth helps employers provide benefits that are cost-effective and competitive. He advises on health plans with HSAs and HRAs and also on severance and fringe benefit arrangements.

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  • Posted in:
    Tax
  • Blog:
    Tax Talks
  • Organization:
    Proskauer Rose LLP
  • Article: View Original Source

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