Federal Tax, Tax

Stock Buyback Programs Potentially Affected by IRA

Does your public company have (or plan to establish) a stock buyback program? The new Inflation Reduction Act imposes a 1% excise tax on stock repurchases. But only some buyback programs will be affected. Buybacks treated as redemptions for tax purposes and made by domestic corporations whose stock is traded on an established securities market will be subject to the tax. But a $1 million exemption applies. This exemption increases if your company issues additional stock during the tax year, including for company employees or employees of certain company affiliates. The IRS still needs to issue guidance on topics such as preferred stock. In the meantime, contact us with questions. © 2022