Page 156 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

142 The Complete Guide to Executive Compensation

Taxable to Executive Tax Deductible for Company

1. Not taxable A. No expense or 100% tax credit
2. Taxable but 100% tax deductible B. 100% tax deductible
3. Taxable but only deductible above allowance C. Partially tax deductible
4. Taxable above a certain allowance D. Not tax deductible
5. Taxable as long-term capital gains
6. Taxable as ordinary income or short-
term capital gains
Table 4-22. Taxable income and tax deductions

Executive Company Examples

1 A Job title
B Matched gift/health care/scholarship
C
D ISO exercise

2 A
B Business travel
C Business entertainment
D
3 A
B Financial counseling
C T&E allowance
D

4 A
B Group life insurance
C
D ISO exercises

5 A
B
C
D Stock option sale (over 12 months after exercise)
6 A
B Cash, stock awards, disqualifying ISO sales,
dividends on restricted stock
C Pay not meeting Section 162(m) requirements
D Dividends

Table 4-23. Taxable income and tax deduction combinations