On February 1st, the Senate overwhelmingly approved the Small Business and Work Opportunity Act of 2007. Sections 206 (pg. 79) and 214 (pg. 98) include amendments to the Internal Revenue Code that would significantly curtail any employee’s ability to defer compensation in excess of $1 million per year under Section 409A.  In addition, the Act would broaden the definition of “covered employee” under Section 162(m) so as to apply the $1 million deduction limitation to payments made to a “covered employee” even after such individual ceases to serve in that capacity.  Note the elimination of the reference to the SEC’s disclosure rules in the 162(m) definition of “covered persons.”

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