A Practice Guide to Minimizing 280G Exposure

The Treasury Department has attempted to clarify the confines of Internal Revenue Code (IRC) Section 280G, though it is often still difficult to predict with reasonable accuracy whether a Change in Control (CIC) reward package is in danger of violating IRC Section 280G. The Internal Revenue Service (IRS) attempts to regulate the magnitude of golden parachutes, but it remains convoluted and ambiguous. As a result, every year, more and more executives are realizing that their golden parachutes do have holes.

In “Does Your Golden Parachute Have Holes? A Practical Guide to Minimizing 280G Exposure,” Manatt identifies some of the critical checkpoints that can prevent the launching of a golden parachute with holes. The article provides some basics on the mechanics of IRC Section 280G, identifies some of the more common circumstances that cause golden parachute problems and recommends various measures to prevent the pitfalls of 280G. Readers will also learn tax minimization strategies that may enable a safe landing even when it appears to be too late.

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