26 CFR 1.162-8
§ 1.162-8 Treatment of excessive compensation.
United States · 26 CFR — Internal Revenue · Status: effective
Cite this
- Citation
- 26 CFR 1.162-8, § 1.162-8 Treatment of excessive compensation, United States, version 1 as recorded 2026-07-09, yourstate.us, https://yourstate.us/provision/109144
- Permanent ID
ys:prov:109144@1- SHA-256
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Full text
The income tax liability of the recipient in respect of an amount ostensibly paid to him as compensation, but not allowed to be deducted as such by the payor, will depend upon the circumstances of each case. Thus, in the case of excessive payments by corporations, if such payments correspond or bear a close relationship to stockholdings, and are found to be a distribution of earnings or profits, the excessive payments will be treated as a dividend. If such payments constitute payment for property, they should be treated by the payor as a capital expenditure and by the recipient as part of the purchase price. In the absence of evidence to justify other treatment, excessive payments for salaries or other compensation for personal services will be included in gross income of the recipient.
Legislative history
This is a federal regulation, adopted through agency rulemaking under the Administrative Procedure Act — not enacted by a recorded vote of Congress.