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Abstract
The SEC's proxy statement rules require a public reporting company that prepares an annual proxy statement to include in the proxy statement disclosures regarding the type and amount of compensation earned by various "named executive officers" of the company. Although the SEC has never formally defined the terms "perquisite" and "other personal benefit," the view of the SEC staff seems to be that personal use of company aircraft by company executives is a perquisite or other personal benefit. The IRS recently issued Notice 2005-45, which provides substantial guidance on the mechanics of the new IRC section 274(e)(2) limitation. The new IRC Section 274(e)(2) limitation only eliminates the excess deduction for personal uses of company aircraft by executives for entertainment purposes. It does not limit the deduction for nonentertainment personal uses. Some companies could permit executives to use the company plane for personal business, but require the executives to reimburse the company for the cost of such use. However, imposing a reimbursement requirement may create complications under the FAA's regulations regarding the commercial operation of aircraft.