§4999 — Golden parachute payments

4 cases·2 followed·2 cited—50% support

Statute Text — 26 U.S.C. §4999

(a)Imposition of tax

There is hereby imposed on any person who receives an excess parachute payment a tax equal to 20 percent of the amount of such payment.

(b)Excess parachute payment defined

For purposes of this section, the term “excess parachute payment” has the meaning given to such term by section 280G(b).

(c)Administrative provisions

(1)Withholding

In the case of any excess parachute payment which is wages (within the meaning of section 3401) the amount deducted and withheld under section 3402 shall be increased by the amount of the tax imposed by this section on such payment.

(2)Other administrative provisions

For purposes of subtitle F, any tax imposed by this section shall be treated as a tax imposed by subtitle A.

4 Citing Cases

Square D Company and Subsidiaries, Petitioner 121 T.C. No. 11 · 2003

In Cline, the taxpayer entered into a severance agreement that would have subjected the taxpayer to an excise tax for parachute payments under section 4999 and his employer to a deduction disallowance under section 280G.

Square D Co. v. Commissioner 121 T.C. 168 · 2003

In addition, the retained executives received “gross up” payments in 1991, totaling $2,143,946, designed to compensate them for any imposition on them of the section 4999 excise tax on parachute payments with respect to the aforementioned stock-related payments.

Powell v. Commissioner 100 T.C. 77 · 1993

Balch v. Commissioner 100 T.C. 331 · 1993