A Practice Note addressing the tax issues that arise for the employer and the employee when compensation paid to an employee is recouped or "clawed back" by the employer, including the impact of a clawback contingency on the employer's deduction, the employee's tax treatment, and the availability of Internal Revenue Code Section 1341 relief to recover taxes paid. This Note sets out the tax issues that arise when various types of equity compensation are clawed back and includes several examples.