Page:United States Statutes at Large Volume 100 Part 3.djvu/1069

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2877

"(2) SPECIAL RULE FOR CORPORATIONS CONTROLLED BY THE TAX-

PAYER.—If—

"(A) a corporation issuing qualified replacement property disposes of a substantial portion of its assets other than in the ordinary course of its trade or business, and "(B) any taxpayer owning stock representing control (within the meaning of section 304(c)) of such corporation at the time of such disposition holds any qualified replacement property of such corporation at such time, qualified replacement property at such time. ^
 * then the taxpayer shall be treated as having disposed of such

"(3) RECAPTURE NOT TO APPLY IN CERTAIN CASES.—Paragraph

(1) shall not apply to any transfer of qualified replacement property— "(A) in any reorganization (within the meaning of section 368) unless the person making the election under subsection «u;«^i'*-i (a)(1) owns stock representing control in the acquiring or acquired corporation and such property is substituted basis property in the hands of the transferee, "(B) by reason of the death of the person making such "^ election, "(C) by gift, or "(D) in any transaction to which section 1042(a) applies." ^ (B) The amendment made by subparagraph (A) shall apply to dispositions after the date of the enactment of this Act, in taxable years ending after such date. -' (9)(A) Chapter 43 (relating to qualified pension, etc. plans) is amended by adding at the end thereof the following new section: "SEC. 4979A. TAX ON CERTAIN PROHIBITED ALLOCATIONS OF QUALIFIED SECURITIES.

"(a) IMPOSITION OF TAX.—If there is a prohibited allocation of qualified securities by any employee stock ownership plan or eligible worker-owned cooperative, there is hereby imposed a tax on such allocation equal to 50 percent of the amount involved. "(b) PROHIBITED ALLOCATION.—For purposes of this section, the term 'prohibited allocation' means— "(1) any allocation of qualified securities acquired in a sale to which section 1042 applies which violates the provisions of section 409(n), and "(2) any benefit which accrues to any person in violation of the provisions of section 409(n). "(c) LiABiliTY FOR TAX.—The tax imposed by this section shall be paid by— "(1) the employer sponsoring such plan, or "(2) the eligible worker-owned cooperative, which made the written statement described in section 10420t)X3XB). "(d) DEFINITIONS.—Terms used in this section have the same respective meaning as when used in section 4978." (B) Subparagraph (B) of section 1042(b)(3) is amended by striking out "section 4978(a)" and inserting in lieu thereof "sections 4978 and 4979A". (C) The table of sections for chapter 43 is amended by adding I at the end thereof the following new item: "Sec. 4979A. Tax on certain prohibited allocations of qualified securities."

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