Page:United States Statutes at Large Volume 100 Part 3.djvu/302

 100 STAT. 2110

PUBLIC LAW 99-514-OCT. 22, 1986

"1 allowable as a deduction to the employer for the cost of the employee achievement award. "(2) EXCESS DEDUCTION AWARD.—If the cost to the employer of the employee achievement award received by the taxpayer '<;?) exceeds the amount allowable as a deduction to the employer, "(A) an amount equal to the portion of the cost to the employer of the award that is not allowable as a deduction to the employer (but not in excess of the value of the award), or "(B) the amount by which the value of the award exceeds the amount allowable as a deduction to the employer. The remaining portion of the value of such award shall not be included in the gross income of the recipient. "(3) TREATMENT OF TAX-EXEMPT EMPLOYERS.—In the case of an employer exempt from taxation under this subtitle, any reference in this subsection to the amount allowable as a deduction ? to the employer shall be treated as a reference to the amount which would be allowable as a deduction to the employer if the employer were not exempt from taxation under this subtitle. "(4) CROSS REFERENCE.— "For provisions excluding certain de minimis fringes from gross income, see section 132(e)." (2) CONFORMING AMENDMENTS.— . .....
 * \ then gross income includes the greater of—

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(A) Clause (i) of section 4941(d)(2)(G) is amended by striking out "section 74(b)" and inserting in lieu thereof "section

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74(b) (without regard to paragraph (3) thereof)". (B) Paragraph (2) of section 4945(g) is amended by striking out "section 74(b)" and inserting in lieu thereof "section 74(b) (without regard to paragraph (3) thereof)". (b) AMOUNTS TRANSFERRED BY EMPLOYER NOT EXCLUDABLE AS

GIFTS.—Section 102 (relating to gifts and inheritances) is amended by adding at the end thereof the following new subsection: "(c) EMPLOYEE GIFTS.—

"(1) IN GENERAL.—Subsection (a) shall not exclude from gross income any amount transferred by or for an employer to, or for the benefit of, an employee. "(2) CROSS REFERENCES.—

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"For provisions excluding certain employee achievement awards from gross income, see section 74(c). "For provisions excluding certain de minimis fringes from gross income, see section 132(e)."

(c) GIFTS.—Section 2740t)) (relating to gifts) is amended— (1) by adding "or" at the end of subparagraph (A) of paragraph (1), (2) by striking out "or" at the end of subparagraph (B) of paragraph (1), and inserting in lieu thereof a period, (3) by striking out subparagraph (C) of paragraph (1), and (4) by striking out paragraph (3). (d) DEDUCTION FOR COST OF EMPLOYEE ACHIEVEMENT AWARDS.—

Section 274 (relating to certain entertainment, etc., expenses) is amended by redesignating subsection (j) as subsection (k) and by inserting after subsection (i) the following new subsection: "(j) EMPLOYEE ACHIEVEMENT AWARDS.— "(1) GENERAL RULE.—No deduction shall be allowed under

section 162 or section 212 for the cost of an employee achieve-

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