Taxation of Compensation and Benefits brings together all areas of compensation and benefits law. The first part discusses traditional compensation and benefits law, including fringe benefits, accident and health plans, VEBAs, cafeteria plans split-dollar life insurance, group-term life insurance, golden parachute agreements, bonuses, vacation pay, loans to employees, employee achievement awards, entertainment expenses, automobile expense deductions, and withholding taxes. The second part discusses stock compensation arrangements, including incentive stock option plans, nonqualified stock option plans, Section 423 employee stock purchase plans, restricted stock, phantom stock plans, employee stock ownership plans, and stock appreciation rights. The third part of the book discusses retirement plans, such as ERISA plans (including pension and profit-sharing plans), nonqualified deferred compensations plans, individual retirement accounts, tax deferred annuities, and section 457 plans. Social Security and Medicare benefits are also discussed.
2012 Highlights
- The book was updated for the changes made by the Trade Adjustment Assistance Extension Act of 2011, the Department of Defense and Full-Year Continuing Appropriations Act of 2011, the Omnibus Trade Act of 2010, the Creating Small Business Jobs Act of 2010, the Hiring Incentives to Restore Employment Act of 2010, the Health Care & Education Affordability Reconciliation Act of 2010, the Patient Protection and Affordable Care Act of 2010, the Health Care and Education Affordability Reconciliation Act of 2010, the Tax and Pension Provisions of the Small Business Jobs Act of 2010, and the Tax Relief, Unemployment Insurance Reauthorization, Job Creation Act of 2010.
- Section 1.07[B][2] was updated regarding the 2011 Revenue Ruling on deduction by accrual basis taxpayers of compensation paid after the close of the tax year.
- Chapters 1, 3, and 11 were updated regarding the new tax rules for self-employed persons, including the fringe benefit rules, the personal service and loan-out rules, and the self-employment taxes.
- Section 2.03[D] was added regarding the new IRS rulings and regulations on deductions by employers for cell phone use by employees.
- Section 2.03[U][6] was added regarding the four per diem reimbursement methods that an employer may now use to reimburse employees for travel and meal expenses.
- Chapter 3 was revised to incorporate the new rulings and regulations regarding health plans under the new Obama tax laws, including a complete discussion of the 21 different types and classes of employer health plans that are now permitted, the requirements for each type of plan, the regulations issued by the Departments of Treasury, Labor and Health Human Services in 2011 and 2012 applicable to such plans, and a discussion of the plans that will be permitted or required beginning in 2014 under the new Exchange rules.
- Chapter 4 was revised regarding the rules applicable to employee automobile expenses in 2012, including the rules for 100% bonus depreciation, leased cars, employee-owned cars, limitations on deduction by 5% owners, and substantiation and reporting.
- Chapter 5 was updated regarding the contribution limits to a VEBA for 2012.
- Chapter 7 was updated regarding the family and dependent care plan contribution limits for 2012.
- Chapter 10 includes the revised rules on deducting employee expenses for employees who live abroad, including the foreign earned income exclusion, the housing expense exclusion, resident and nonresident alien compensation, and tax treaties.
- Chapter 12 was updated regarding the cases in 2011 and 2012 on determining reasonableness of compensation, and the deduction of compensation, including the new limits on deductions for publicly-traded corporations, TARP corporations and partnerships, and covered health insurance providers.
- Section 13.03[D][2] discusses the alternative minimum tax rules that apply to stock option exercises in 2012.
- Chapter 17 was updated regarding the new rules on Social Security and Medicare in 2012.
- Chapter 18 was revised regarding the contribution limits and rules applicable in 2012 to the 14 types of individual retirement accounts.
- Chapter 19 was updated regarding qualified employer plans, including limits on deductions, cash balance and other hybrid plans, and the new rules for annual additions. Section 19.02[A][2] includes the 2012 rules for amending defined contribution plans. Section 19.02[H][2] sets forth the new requirements for a Section 401(k) plan. Section 19.04 sets forth the procedures for obtaining an initial determination letter for master and prototype plans, volume submitter plans, and individually designed plans, and the procedures for determination letters for amending and revising plans during the five and six-year amendment cycles. Section 19.12[B][2] was added regarding the permissible contribution formulas to a defined benefit plan. Section 19.14 was revised regarding the permissible interest rates on loans to participants. Section 19.18 was added regarding the notices that must be given to participants in a qualified employer plan.
- Chapter 20 was updated regarding the deferred compensation rules in 2012. Section 20.02[C][2] was revised regarding the deferred compensation payable to employees on separation of service, including limits on compensation payable to “specified employees.”
- Chapter 22 was updated regarding the deferred compensation rules payable to employees under Section 457 plans.
