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On December 4, 2009, the IRS released CCA 200949040. This release reminds taxpayers that bonus payments to be paid in the following year (for services performed in the current year) may not be deducted if the payment of the bonus is contingent on the employee being employed on the date of the bonus payment.
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On December 4, 2009, the IRS released CCA 200949040. This
release reminds taxpayers that bonus payments to be paid in the
following year (for services performed in the current year) may not
be deducted if the payment of the bonus is contingent on the
employee being employed on the date of the bonus payment. In this
case, the contingency (being employed on the date of payment) means
that the bonus plan is not a fixed liability in the current year.
Because it will not pass the "all events test," the bonus
is not deductible in the current year.
In order to deduct the bonus payments in the current year,
taxpayers may want to amend their bonus plans to require that
recipients be employed on December 31, 2009 (instead of the date of
the bonus payment). To change the treatment of the bonus payment,
this amendment must be made by December 31, 2009.
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guide to the subject matter. Specialist advice should be sought
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