Page:United States Statutes at Large Volume 100 Part 3.djvu/1000

 100 STAT. 2808

PUBLIC LAW 99-514—OCT. 22, 1986 I

"(4) TREATMENT OF AMOUNTS WHICH TAXPAYER ESTABLISHES AS

1 REASONABLE COMPENSATION.—In the case of any payment described in paragraph (2)(A)— "(A) the amount treated as a parachute payment shall ..^ not include the portion of such payment which the taxpayer 1, establishes by clear and convincing evidence is reasonable compensation for personal services to be rendered on or after the date of the change described in paragraph (2)(A)(i), and "(B) the amount treated as an excess parachute payment shall be reduced by the portion of such payment which the taxpayer establishes by clear and convincing evidence is reasonable compensation for personal services actually ren^ dered before the date of the change described in paragraph (2)(A)(i). For purposes of subparagraph (B), reasonable compensation for services actually rendered before the date of the change de" scribed in paragraph (2)(A)(i) shall be first offset against the ^ base amount." (3)

EXEMPTION

FOR PAYMENT UNDER

QUALIFIED

PLANS.—

Subsection (b) of section 280G (defining excess parachute pay' ment) is amended by adding at the end thereof the following new paragraph: "(6) EXEMPTION FOR PAYMENTS UNDER QUALIFIED PLANS.—Not-

- withstanding paragraph (2), the term 'parachute payment' shall not include any payment to or from— "(A) a plan described in section 401(a) which includes a trust exempt from tax under section 501(a), "(B) an annuity plan described in section 403(a), or "(C) a simplified employee pension (as defined in section 408(k))." (4) TREATMENT OF AFFIUATED GROUPS.—Subsection (d) of section 280G is amended by adding at the end thereof the following new paragraph: "(5) TREATMENT OF AFFILIATED GROUPS.—Except as otherwise

provided in regulations, all members of the same affiliated group (as defined in section 1504, determined without regard to section 15040))) shall be treated as 1 corporation for purposes of this section. Any person who is an officer or any member of such group shall be treated as an officer of such 1 corporation." (5) LIMITATION ON NUMBER OF INDIVIDUALS TREATED AS HIGHLY

'I COMPENSATED.—Subsection (c) of section 280G (defining disquali' fied individual) is amended by adding at the end thereof the following new sentence: "For purposes of paragraph (2), the ual who is (or would be if the individual were an employee) a member of the group consisting of the highest paid 1 percent of •* the employees of the corporation or, if less, the highest paid 250 • employees of the corporation." (6) EXCLUDED AMOUNTS NOT TAKEN INTO ACCOUNT IN DETERMINING WHETHER THRESHOLD AMOUNT IS MET.—Subparagraph
 * term 'highly-compensated individual' only includes an individ^

E (A) of section 280G(b)(2) (defining parachute payment) is amended by adding at the end thereof the following new sentence: "For purposes of clause (ii), payments not treated as parachute payments under paragraph (4)(A), (5), or (6) shall not be taken into account."

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