TAX 9873 Lecture Notes - Lecture 68: Deferred Compensation, Constructive Receipt, Independent Contractor
Document Summary
Receipt for this purpose is not confined to actual receipt of the compensation, but also to. The primary issues centered around this doctrine is the circumstances and timing of the election to defer compensation and any subsequent elections regarding the form or timing of payment of such deferred compensation. Proper procedures will result in postponement of taxation to when payments are made to the employee or service provider. These proper procedures include following prescribed election requirements under irc 409a (or applicable guidance that was effective prior to the effective date of irc 409a) State law should be reviewed to determine whether the tax treatment of nonqualified deferred compensation is different from federal tax treatment. If the deferral of compensation is elected by the employee, the election to defer must be entered into before it is earned and must be irrevocable. This is necessary to successfully delay taxation on the income.
