Ascend, a publicly held corporation, hired its current president, Lasya Lasisi, in September 2017 at a base salary of $1,000,000 plus a bonus that is contingent upon meeting certain performance targets. Every year since she was hired, Lasya has earned a substantial bonus. Her bonus in 2023 is expected to be $1,200,000, bringing her total compensation to $2,200,000. Ascend's Board of Directors is considering renegotiating Lasya's employment contract to provide a base salary of $2,000,000 with a new performance-based bonus that specifies new targets.

Prepare a letter to Ascend's Board of Directors that identifies the amount of compensation that will be deductible by Ascend in 2023 and identifies any issues associated with changing the president's compensation and bonus plans. Address the letter to the board chairperson, Angela Riddle, whose address is 150 Erieview Tower, Cleveland, OH 44106.

SWFT, LLP
5191 Natorp Boulevard
Mason, OH 45040

September 16, 2023

Ms. Angela Riddle, Chairperson
Board of Directors
Ascend, Inc.
150 Erieview Tower
Cleveland, OH 44106

Dear Ms. Riddle:

I am responding to your inquiry regarding the current compensation plan for Ascend’s president. The current plan has been in place since 2017. It provides for a base salary of $1,000,000 plus a performance-based bonus that is projected to be $1,200,000 in 2023, resulting in projected total compensation of $2,200,000 in 2023. I understand that the Board is considering revising the president’s compensation plan.

In general, any salary paid to the president in excess of $fill in the blank 1 is deemed excessive executive compensation and not deductible.
2018, compensation earned under a performance-based compensation option
subject to this limitation. Since 2017, Ascend has been able to deduct base compensation of $fill in the blank 4 and
of the additional performance-based bonus. In 2023, we project Ascend deducted $2,200,000 in total compensation paid to the president.

The Tax Cuts and Jobs Act (TCJA) of 2017 made significant changes to this area of the law. Beginning in 2018, the annual limit
compensation, commissions, and performance-based compensation unless these amounts were part of a contract as of November 2, 2017, and there have been no material modifications to the contract. Since the president's contract was in place as of November 2, 2017, and no material changes have been made to the contract, Ascend
be able to deduct
the compensation paid to the president in 2022 and 2023.

I recommend that you
any changes to the president's performance-based compensation contract. Doing so could be a material modification that would make the contract
to the new provisions. If, in the future, modifications need to be made to the contract, please consult with us at that time so that we can structure the changes in the most tax-efficient manner.

Please let me know if you have any questions.
Sincerely,

Vijay Singh, CPA