New section 457A of the Internal Revenue Code became effective January 1, 2009, and generally provides that amounts deferred under a nonqualified deferred compensation plan sponsored by certain offshore funds and other “nonqualified entities” is included in the service provider’s taxable income when the deferred compensation is no longer subject to a “substantial risk of forfeiture,” whether or not it is payable to the service provider at that time.

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Source: Hedge Fund Alert
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