Page:United States Statutes at Large Volume 100 Part 3.djvu/1071

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2879

"(iv) SPECIAL RULES FOR OBLIGATIONS TO WHICH SECTION 133 APPLIES.—In the case of an obligation to which

section 133 applies, interest on such obligation shall not be treated as exempt from taxes for purposes of this subparagraph." (2)(A) Section 133 (relating to exemption for interest on certain loans used to acquire employer securities) is amended by adding at the end thereof the following new subsection: "(d) APPLICATION WITH SECTION 483 AND ORIGINAL ISSUE DISCOUNT

RULES.—In applying section 483 and subpart A of part V of subchapter P to any obligation to which this section applies, appropriate adjustments shall be made to the applicable Federal rate to take into account the exclusion under subsection (a)." (B) Section 7872(f) is amended by adding at the end thereof the following new paragraph: ,

"(11) SPECIAL RULE FOR CERTAIN EMPLOYER SECURITY LOANS.—

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This section shall not apply to any loan between a corporation (or any member of the controlled group of corporations which includes such corporation) and an employee stock ownership plan described in section 4975(e)(7) to the extent that the interest rate on such loan is equal to the interest rate paid on a related securities acquisition loan (as described in section 133(b)) to such corporation." (C) Section 1330t))(2) is amended by adding at the end thereof the following new flush sentence: "For purposes of this paragraph, subparagraphs (A) and (B) shall not apply to any loan which, but for such subparagraphs, would be a securities acquisition loan if such loan was not originated by the employer of any employees who are covered by the plan or by any member of the controlled group of corporations which includes such employer, except that this section shall not apply to any interest received on such loan during such time as such loan is held by such employer (or any member of such controlled group)." (D) Section 133(b) is amended by redesignating paragraph (3) as paragraph (4) and by adding after paragraph (2) the following new paragraph:

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"(3)

TERMS APPLICABLE TO CERTAIN SECURITIES ACQUISITION

LOANS.—A loan to a corporation shall not fail to be treated as a securities acquisition loan merely because the proceeds of such loan are lent to an employee stock ownership plan sponsored by such corporation (or by any member of the controlled group of corporations which includes such corporation) if such loan includes— "(A) repayment terms which are substantially similar to ,^. the terms of the loan of such corporation from a lender described in subsection (a), or ...JII "(B) repayment terms providing for more rapid repayment of principal or interest on such loan but only if— "(i) allocations under the plan attributable to such repayment do not discriminate in favor of highly compensated employees (within the meaning of sectio 414(q)), and "(ii) the total commitment period of such loan to the corporation does not exceed 7 years." (d) AMENDMENTS RELATED TO SECTION 544.—

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