A primer on how to stop the AIG bonuses…

markherrmann:

A Yale Law School student knows how the to stop the AIG bonuses:

Larry Summers claims that nothing can be done about the AIG bonuses. As a former Secretary of the Treasury, he should know better.

Treasury Secretary Tim Geithner should direct the Commissioner of Internal Revenue to challenge the AIG bonuses as unreasonable compensation under the Internal Revenue Code. Finding the AIG bonuses to be unreasonable compensation would render them nondeductible for federal tax purposes, and would strengthen potential shareholder derivative suits to recapture The Great AIG Giveaway.

Section 162(a) of the Internal Revenue Code declares:

“There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including … a reasonable allowance for salaries or other compensation for personal services actually rendered.”

Said student is Aaron Zelinsky, Articles Editor, Yale Law Journal. Full article in the Huffington Post. 

Notes