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The Impact of New Tax Code Section 409A on Hedge Fund Deferral Arrangements |
October 22, 2006
Previously published on December 20, 2005
New Section 409A, added to the Internal Revenue Code in October 2004 by the American
Jobs Creation Act, subjects most arrangements that defer compensation from one tax year to
another and that do not enjoy specific tax qualification to complex new rules. If an
arrangement subject to the new statute fails to satisfy its requirements, in form or in operation,
then the employee, director, independent contractor or other "service provider" is subject to
income taxation on the deferred compensation before receipt, a 20% additional tax and
possibly an interest charge.
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The views expressed in this article are solely the views of the author and not Martindale-Hubbell. This article is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance. |
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