A company is denied a deduction for a golden parachute payment to an employee but not for a golden parachute payment to an independent contractor.

Question

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Golden parachute payments, which are substantial payments made to executives upon a change in a company's control, are subject to the same tax implications regardless of whether the recipient is an employee or an independent contractor. The tax code does not differentiate based on the recipient's employment status but rather on the nature and terms of the payment.

A Company Is Denied a Deduction for a Golden Parachute