Federal Register - January 19, 2021
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Source: Federal Register
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Federal Register / Vol. 86, No. 11 / Tuesday, January 19, 2021 / Rules and Regulations
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of $900,000. The $200,000 payment is made upon separation from employment, and the $900,000 payment is to be made on a date in a future taxable year. The present value of the $900,000 payment is $800,000 as of the date of the separation from employment.
ATEO 2 elects to prepay the excise tax on the $900,000 future parachute payment of which $740,000 is an excess parachute payment. The tax rate under section 11 is 21 percent for the taxable year the excise tax is paid and, using a discount rate determined under 53.49603i, the present value of the $155,400 $740,000 21 percent excise tax on the $740,000 future excess parachute payment is $140,000.
B Conclusion. The excess parachute payment is thus $800,000 $200,000
plus $800,000 present value of the $900,000 future payment, less $200,000
base amount, with $40,000 of the base amount allocable to the $200,000
payment and $160,000 of the base
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amount allocable to the $900,000
payment. To prepay the excise tax on the $740,000 future excess parachute payment, the employer must satisfy its $140,000 obligation under section 4960
with respect to the future payment, in addition to the $33,600 excise tax $160,000 21 percent on the $160,000
excess parachute payment made upon separation from employment. For purposes of determining the amount of excess remuneration if any under section 4960a1, the amount of remuneration paid by the employer to the covered employee for the taxable year of the separation from employment is reduced by the $900,000 of total excess parachute payments $160,000 +
$740,000.
53.49605
Reserved
53.49606
Applicability date.
apply to taxable years beginning after December 31, 2021. Taxpayers may choose to apply 53.49600 through 53.49604 to taxable years beginning after December 31, 2017, and on or before December 31, 2021, provided the taxpayer applies 53.49600 through 53.49604 in their entirety and in a consistent manner.
b Reserved Sunita Lough, Deputy Commissioner for Services and Enforcement.
Approved: January 9, 2021.
David J. Kautter, Assistant Secretary of the Treasury Tax Policy.
FR Doc. 202100772 Filed 11521; 4:15 pm BILLING CODE 483001P
a General applicability date.
Sections 53.49600 through 53.49604
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