Update To Client Memorandum On Section 162(M) Of The Internal Revenue Code

On February 4, 2008, Fried Frank issued a client memorandum describing a recent Private Letter Ruling in which the Internal Revenue Service ("IRS") reversed its previous position on the effect that certain termination of employment provisions have on payments which are intended to qualify as "performancebased compensation" for purposes of section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). That ruling held that performance-based arrangements that accelerate upon a termination without cause or for good reason would not qualify, whether or not the performance goals are actually attained. Although a Private Letter Ruling can be relied on only by the taxpayer receiving the ruling, a Private Letter Ruling is indicative of the IRS' position on an issue.