In a c Corp which is into research and development, started in 2005, from then they were in losses as they didn't hav any revenue. In 2008 and 2009 they cudn't pay to their 2 key employees any pay not even basic wages and in financial statement they are showing that as payroll liability, they did not run the payroll also and not claimed any tax benefits. Is this considered as deferred compensation and does Sec 409A will apply to this company.? Company did not pay wages or salaries to key employees only because of its financial condition and not to evade taxes. Its a financially distressed company.

Thanks
Rachna