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On Friday of last week (October 22, 2004), President Bush signed into law the American Jobs Creation Act of 2004. A summary of this act's impact upon deferred compensation is attached. Because the act does not provide very liberal grandfathering provisions (generally, only grandfathering compensation which is vested and deferred prior to October 3, 2004, and which is not modified thereafter), all deferred compensation programs or arrangements of any type should be reviewed to determine how the new act will impact the taxation of such programs or arrangements. Additionally, the act provided permanent relief regarding the IRS' attempted FICA taxation and income tax withholding taxation of disqualified dispositions of stock purchased pursuant to an incentive stock option.

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