article: SECTION 1. SPECIAL RULES FOR EXECUTIVE PERKS AND RETIREMENT BENEFITS. (a) In General.--Part I of subchapter D of chapter 1 of the Internal Revenue Code of 1986 (relating to pension, profit-sharing, stock bonus plans, etc.) is amended by adding at the end the following new subpart: ``subpart f--special rules for executive perks and retirement benefits ``Sec. 420A. Holding period requirement for stock acquired through exercise of option. ``Sec. 420B. Additional tax on nondisclosed retirement perks. ``Sec. 420C. Inclusion in gross income of funded deferred compensation of corporate insiders. ``Sec. 420D. Definitions and special rule. ``SEC. 420A. HOLDING PERIOD REQUIREMENT FOR STOCK ACQUIRED THROUGH EXERCISE OF OPTION. ``(a) In General.--In the case of a corporate insider with respect to a corporation, the tax imposed by this chapter on a corporate insider for any taxable year shall be increased by 50 percent of the amount realized by such insider from the disqualified disposition during such year of stock acquired by the corporate insider upon the exercise of a stock option granted by the corporation with respect to which such individual is a corporate insider. ``(b) Disqualified Disposition of Stock.-- ``(1) In general.--For purposes of subsection (a), the term `disqualified disposition of stock' means any sale, exchange, or other disposition of stock which, if such stock were employer securities held in a qualified cash or deferred arrangement (as defined in section 401(k)(2)), would violate any restriction imposed on the sale or other disposition of such securities by the plan of which such arrangement is a part. ``(2) Special rule for 2 or more cash or deferred arrangements.--If a corporation has more than 1 qualified cash or deferred arrangement (as so defined), the restrictions which apply for purposes of paragraph (1) shall be the most restrictive provisions relating to the disposition of employer securities held pursuant to any such arrangements. ``SEC. 420B. ADDITIONAL TAX ON NONDISCLOSED RETIREMENT PERKS. ``(a) In General.--In the case of a publicly traded corporation, the tax imposed by this chapter for the taxable year shall be increased by 50 percent of the net cost to the corporation for the taxable year of personal perks provided to a retired executive of the corporation. ``(b) Waiver If Perks Provided Pursuant to Shareholder Approval.-- Subsection (a) shall not apply with respect to any personal perks provided pursuant to a contract if-- ``(1) all of the material terms of such contract (including a description of the benefits to be provided to the executive and the extent of such benefits) are disclosed to shareholders, and ``(2) such contract is approved by a majority of the vote in a separate shareholder vote before any benefits are provided under the contract. ``(c) Net Cost of Personal Perks.-- ``(1) In general.--For purposes of subsection (a), the net cost of personal perks provided to a retired executive is the excess of-- ``(A) the cost to the corporation of such perks, over ``(B) the amount paid in cash during the taxable year by the executive to reimburse the corporation for the cost of such perks. ``(2) Personal perks.--For purposes of paragraph (1), the term `personal perks' means-- ``(A) the use of corporate-owned property, ``(B) travel expenses, including meals and lodging, unless such expenses are directly related to the performance of services by the executive for the corporation and the business relationship of such expenses is substantiated under the requirements of section 274, ``(C) tickets to sporting or other entertainment events, ``(D) amounts paid or incurred for membership in any club organized for business, pleasure, recreation, or other social purpose, and ``(E) other personal services, including services related to maintenance or protection of any personal residence of the executive. ``(3) Cost relating to use of corporate-owned property.-- For purposes of this subsection-- ``(A) In general.--The cost taken into account with respect to the use of corporate-owned property shall be the allocable portion of the total cost of operating such property. ``(B) Allocable portion.--For purposes of subparagraph (A), the allocable portion of total cost is-- ``(i) the portion of the total cost (including depreciation) incurred by the corporation for operating and maintaining such property during the corporation's taxable year in which such use occurred, ``(ii) which is allocable to the use (determined on the basis of the relationship of such use to the total use of the property during the taxable year). ``SEC. 420C. INCLUSION IN GROSS INCOME OF FUNDED DEFERRED COMPENSATION OF CORPORATE INSIDERS. ``(a) In General.--If an employer maintains a funded deferred compensation plan-- ``(1) compensation of any corporate insider which is deferred under such funded deferred compensation plan shall be included in the gross income of the corporate insider or beneficiary for the 1st taxable year in which there is no substantial risk of forfeiture of the rights to such compensation, and ``(2) the tax treatment of any amount made available under the plan to a corporate insider or beneficiary shall be determined under section 72 (relating to annuities, etc.). ``(b) Funded Deferred Compensation Plan.--For purposes of this section-- ``(1) In general.--The term `funded deferred compensation plan' means any plan providing for the deferral of compensation unless-- ``(A) the employee's rights to the compensation deferred under the plan are no greater than the rights of a general creditor of the employer, and ``(B) all amounts set aside (directly or indirectly) for purposes of paying the deferred compensation, and all income attributable to such amounts, remain (until made available to the participant or other beneficiary) solely the property of the employer (without being restricted to the provision of benefits under the plan), and ``(C) the amounts referred to in subparagraph (B) are available to satisfy the claims of the employer's general creditors at all times (not merely after bankruptcy or insolvency). Such term shall not include a qualified employer plan. ``(2) Special rules.-- ``(A) Employee's rights.--A plan shall be treated as failing to meet the requirements of paragraph (1)(A) unless-- ``(i) the compensation deferred under the plan is payable only upon separation from service, death, disability, or at a specified time (or pursuant to a fixed schedule), and ``(ii) the plan does not permit the acceleration of the time such deferred compensation is payable by reason of any event. If the employer and employee agree to a modification of the plan that accelerates the time for payment of any deferred compensation, then all compensation previously deferred under the plan shall be includible in gross income for the taxable year during which such modification takes effect and the taxpayer shall pay interest at the underpayment rate on the underpayments that would have occurred had the deferred compensation been includible in gross income on the earliest date that there is no substantial risk of forfeiture of the rights to such compensation. ``(B) Creditor's rights.--A plan shall be treated as failing to meet the requirements of paragraph (1)(B) with respect to amounts set aside in a trust unless-- ``(i) the employee has no beneficial interest in the trust, ``(ii) assets in the trust are available to satisfy claims of general creditors at all times (not merely after bankruptcy or insolvency), and ``(iii) there is no factor that would make it more difficult for general creditors to reach the assets in the trust than it would be if the trust assets were held directly by the employer in the United States. Except as provided in regulations prescribed by the Secretary, such a factor shall include the location of the trust outside the United States. ``(c) Other Definitions and Special Rules.--For purposes of this section-- ``(1) Qualified employer plan.--The term `qualified employer plan' means-- ``(A) any plan, contract, pension, account, or trust described in subparagraph (A) or (B) of section 219(g)(5), and ``(B) any other plan of an organization exempt from tax under subtitle A. ``(2) Plan includes arrangements, etc.--The term `plan' includes any agreement or arrangement. ``(3) Substantial risk of forfeiture.--The rights of a person to compensation are subject to a substantial risk of forfeiture if such person's rights to such compensation are conditioned upon the future performance of substantial services by any individual. ``(4) Treatment of earnings.--Except for purposes of subsection (a)(1) and the last sentence of (b)(2)(A), references to deferred compensation shall be treated as including references to income attributable to such compensation or such income. ``SEC. 420D. DEFINITIONS AND SPECIAL RULE. ``(a) Definitions.--For purposes of this subpart-- ``(1) Corporate insider.--The term `corporate insider' means, with respect to a corporation, any individual-- ``(A) who is subject to the requirements of section 16(a) of the Securities Exchange Act of 1934 with respect to such corporation, or ``(B) who would be subject to such requirements if such corporation were an issuer of equity securities referred to in such section. ``(2) Retired executive.--The term `retired executive' means any corporate insider who is no longer performing services on a substantially full time basis in the capacity that resulted in being subject to the requirements of section 16(a) of the Securities Exchange Act of 1934. ``(3) Publicly traded corporation.--The term `publicly traded corporation' means any corporation issuing any class of securities required to be registered under section 12 of the Securities Exchange Act of 1934. ``(4) Corporate-owned property.-- ``(A) In general.--Except as provided in subparagraph (B), the term `corporate-owned property' means any of the following property owned by a corporation-- ``(i) planes, ``(ii) apartments or other residences, ``(iii) vacation, sports, and entertainment facilities, and ``(iv) cars. Such term includes any such property which is leased or chartered by the corporation. ``(B) Exceptions.--Such term does not include any property used directly by the corporation in providing transportation, lodging, or entertainment services to the general public. ``(b) Additions to Tax Not Treated As Tax for Certain Purposes.-- The tax imposed by sections 420A and 420B shall not be treated as a tax imposed by this chapter for purposes of determining-- ``(1) the amount of any credit allowable under this chapter, or ``(2) the amount of the minimum tax imposed by section 55.''. (b) Clerical Amendment.--The table of subparts for part I of subchapter D of chapter 1 of such Code is amended by adding at the end the following new item: ``Subpart F. Special Rules for Executive Perks and Retirement Benefits.''. (c) Effective Date.--The amendments made by this section shall take effect as follows: (1) Section 420A of the Internal Revenue Code of 1986 (as added by this section) shall apply to stock acquired pursuant to the exercise of an option after the date of the enactment of this Act. (2)(A) Except as provided by subparagraph (B), section 420B of such Code (as so added) shall apply to perks provided after the date of the enactment of this Act. (B) In the case of perks provided pursuant to a contract in existence on the date of the enactment of this Act, such section 420B shall apply to such perks after the date of the first annual shareholders meeting after the date of the enactment of this Act. (3) Section 420C of such Code (as so added) shall apply to amounts deferred after the date of the enactment of this Act.
summary: Amends the Internal Revenue Code to: (1) increase, for a corporate insider, the applicable tax by 50 percent of the amount realized by such insider from the disqualified disposition of stock (a sale violating specified restrictions) acquired by such corporate insider upon the exercise of a stock option granted by the corporation; (2) increase, for a publicly traded corporation, the applicable tax by 50 percent of the net cost to the corporation of personal perks provided to a retired executive of the corporation; and (3) include in the gross income of a corporate insider funded deferred compensation.