This bill amends the tax code to tie executive pay deductions to profit-sharing requirements. Under the legislation, businesses with annual gross receipts above a certain threshold cannot deduct executive compensation expenses unless they also distribute at least 5 percent of their net income to employees through a profit-sharing plan. The profit-sharing must cover all employees who have worked at the company for at least one year, including part-time workers, and cannot discriminate among eligible employees. The bill provides a limited exception for companies that can prove profit-sharing would threaten their survival, and gives the IRS authority to prevent companies from circumventing the law by cutting worker benefits while making profit-sharing distributions. The law takes effect for tax years beginning after its enactment.
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