Selling An LLC? Don't Forget About 280G! - Faegre Drinker

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Skip to content Faegre Drinker Biddle & Reath LLP, a Delaware limited liability partnership | This website contains attorney advertising. Blog Post March 02, 2022 Selling an LLC? Don’t Forget About 280G! Spotlight on Benefits Blog Email Facebook LinkedIn X Authors:
  • Mark P. Rosenfeld
  • Erik D. Vogt

Internal Revenue Code Section 280G (280G) (commonly referred to as the golden parachute provision) is intended to discourage the payment of excessive compensation to certain shareholders, officers and highly compensated service providers of companies undergoing a change in control. In general, when transaction-related payments or benefits to a covered individual equal or exceed three times the individual’s average compensation for the previous five years, the individual may be subject to a 20% excise tax, and the company’s deduction for such payments or benefits may be disallowed (in each case, with respect to amounts in excess of the average compensation).

280G commonly applies when a C-corporation undergoes a corporate transaction. However, in certain circumstances, 280G can also apply when the only entity being sold is an LLC.

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Selling an LLC? Don’t Forget About 280G! | Faegre Drinker Biddle & Reath LLP https://www.faegredrinker.com/-/media/images/professionals/no_photo_placeholder.jpg?rev=4f256b3cf62c45bc84c5202f0c3ae2dc&hash=F0486198117E45BE38AF1085AD2F65C2 Selling an LLC? Don’t Forget About 280G! | Faegre Drinker Biddle & Reath LLP https://www.faegredrinker.com/-/media/images/professionals/no_photo_placeholder.jpg?rev=4f256b3cf62c45bc84c5202f0c3ae2dc&hash=F0486198117E45BE38AF1085AD2F65C2

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