Page 766 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Appendix D

Selected Revenue Rulings

T hese revenue rulings are intended to be illustrative rather than the basis for forming
definitive tax positions. Such matters should be taken up with appropriate counsel.

Deferred Compensation
• Rev. Rul. 60–31. Stated that an unsecured promise by the company to make a payment to a
person in the future will not result in currently taxable income even absent a risk of forfeiture
of such payment.
• Rev. Rul. 64–279. Amends Rev. Rul. 60–31, indicating the IRS will consider requests for
advance rulings on deferred compensation agreements.
• Rev. Rul. 68–99. Employee is not in receipt of income as a result of employer’s purchase of an
insurance contract where the employee does not receive a present economic benefit therefrom.
• Rev. Rul. 68–454. Disallows deferred compensation by certain officer-employees under
certain circumstances.
• Rev. Rul. 69–145. Compensation can be recognized for pension plans if all employees are
eligible to defer compensation.
• Rev. Rul. 69–650. Indicated that a decision by December 31 is required in connection with
compensation to be earned during the following year. This is the year-before-the-year principle.
• Rev. Rul. 70–435. The mere promise to pay does not trigger an income tax liability to the
recipient as long as such promise does not include earnings and funds that put the recipient
ahead of general creditors.
• Rev. Rul. 72–25. Combined with Rev. Rul. 68–99, suggests the company can fund a deferred
compensation obligation without triggering an income liability to the employee if the
company owns all policy rights.
• Rev. Rul. 73–166. Severance payments constitute wages and therefore are subject to federal tax
withholdings.
• Rev. Rul. 73–599. Retired lives reserves plans are not deferred compensation plans.

751
Copyright © 2007 by Bruce R. Ellig. Click here for terms of use.