Section 280G of the Internal Revenue Code aims to limit excessive compensation, specifically targeting 'golden parachute payments' to disqualified individuals, which include executives and significant shareholders. It applies when compensatory payments are given to these individuals contingent on a change in ownership or control of the company. This provision is in place to prevent financially detrimental payouts during corporate transitions.

1. What is Section 280G?
Section 280G of the Internal Revenue Code is
designed to prevent excessive remuneration
(sometimes known as “golden parachute payments”)
to certain officials, highly compensated individuals,
and shareholders who own more than 1% of a
company (known as “disqualified individuals”)

2. When Does Section
280G Apply?
When compensatory
payments are made to
disqualified individuals

3. When Does Section
280G Apply?
When compensatory
payment is contingent
on a change in the
“ownership” or
“effective control”