Discussion:Professional fees for HSR Filing

Does anyone know if there is a supportable basis for the payment of the HSR fees and not being income to the officers and directors and deductible by the Company. The argument is in the spirit of the revenue ruling where a E&O policy being paid for by the company and not includable in gross income of the officer.

In this case filings fees resulted from the exercise of options granted to officers. The purpose of the equity compensation plan is to compensate the officers and directors for serving in such capacity. In the case of the Revenue Ruling 69-491 discussed above, an officer or director would be reluctant to serve in such capacity if he were exposed to personal liability. A similar argument can be made that an officer or director would be reluctant to serve in these capacities if it would subject him to significant filing fees and expense. In this case would there be support for the position that the employer directly pays expenses incurred by an employee or officer in pursuit of the employers business, and therefore the employee does not have compensation gross income.

Any ideas or rulings would be welcomed in this instance.

I disagree that Rev Rul 69-491 is on point. Big difference between buying D&O insurance and expediting a compensation scheme.

What logic there is in Rev Rul 69-491 is that the insurence was for the benefit of the employer and not for the employee, ergo it is not compensation to the employee, even though the employee benefits from it. It wasn't a test based on an inducement to overcome an employee's reluctance to serve.

The corp can still reimburse the officers and deduct it under §162. Be sure to follow the accountable plan rules. I tend to believe that this would be considered compensation to the officers.