Free Tax Research Essay Sample

COMTECH limits its executive’s compensation to less than $ 1 million; this is because the executive should not take more than 300% of the total pretax profits. When this happens, the company deducts an agreed amount of money. COMTECH, 2010 states that certain forms of compensation exemptions from these deductions include; qualified performance based compensations.

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Executives in most quoted companies manage substantial amounts of revenues that they contribute to its generation. Therefore, the amount of reimbursement they get and the tax deducted from such salaries should be given exceptional consideration. This is because, the revenues from such taxations are also extremely essential to an economy considering their exemplary contribution. Executives also have resulted into equity ownership in the companies they manage; this has resulted to them controlling of the majority of the shares, and most of their revenue comes in the form of taxes. The mode of taxation of executive salaries has changed over the years for various reasons; compensations given to the executives that exceed one million faces taxation and most of this money passed to the government. This, therefore, reduces the amount of income that the company receives; this, therefore, limits the amount the amount of compensation awarded to CEO’s in terms of salaries and other taxable benefits.

Non equity based compensation

COMTECH, 2010 explains that, the company's non-equity incentive plan for each fiscal year; they pay in the first quarter of the coming fiscal year. This happens upon final approval by the ECC and the issuance of the Company’s annual audited financial statements.   Non-equity incentive plan compensation paid in each fiscal year; depends on the amount of pre-tax profit (as defined) that relates to the business operations. THE NEO takes direct responsibility for it and depends on the ECC’s subjective assessment of performance of each NEO (including our CEO). In the case, of Messrs. Kornberg, Porcelain and Rouse, who are the directors; the pre-tax profit level depends on company-wide results.

Fringe benefit

The company provides fringe benefit for its employees. Fringe benefit tax  involves benefits employers provide to their employees or employees’ in place of wages or salaries. These benefits qualify for exemption from taxation by fulfilling the necessary conditions. They include health, education reimbursements, employee discounts and personal use of company car among other benefits. The tax deductions from such compensation have a limit of $1 million per person per year; such persons are the company CEO’s and other chief executives staff in the organization.. However, some fringe benefits do not qualify for exemption from taxation unless section 162 of the taxation act states it.

COMTECH, 2010 illustrates that some of the fringe benefits that employees have faces ubject to taxation under section 162; but the overall tax losses to the company that results from such intent deductions amounted to $45000 in the year 2010.


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