Page:United States Statutes at Large Volume 103 Part 3.djvu/283

 PUBLIC LAW 101-239—DEC. 19, 1989 103 STAT. 2351 applied by substituting "less than 30 percent" for "50 percent or less". The preceding sentence shall apply to any loan which is used to refinance a loan described in such sentence if the requirements of subparagraphs (A), (B), and (C) of paragraph (3) are met with respect to the refinancing loan. SEC. 7302. LIMITATIONS ON DEDUCTIONS FOR DIVIDENDS PAID ON EMPLOYER SECURITIES. (a) IN GENERAL.—Subsection (k) of section 404 is amended to read as follows: "(k) DEDUCTION FOR DIVTOENDS PAID ON CERTAIN EMPLOYER SECU- RITIES.— "(1) GENERAL RULE. — In the case of a corporation, there shall be allowed as a deduction for a taxable year the amount of any applicable dividend paid in cash by such corporation during the taxable year with respect to applicable employer securities. Such deduction shall be in addition to the deductions allowed under subsection (a). "(2) APPLICABLE DIVIDEND.— For purposes of this subsection— "(A) IN GENERAL.—The term 'applicable dividend' means any dividend which, in accordance with the plan provi- sions— "(i) is paid in cash to the participants in the plan or their beneficiaries, "(ii) is paid to the plan and is distributed in cash to participants in the plan or their beneficiaries not later than 90 days after the close of the plan year in which paid, or "(ui) is used to make payments on a loan described in subsection (a)(9) the proceeds of which were used to acquire the employer securities (whether or not allo- cated to participants) with respect to which the divi- dend is paid. "(B) LIMITATION ON CERTAIN DIVIDENDS.—A dividend described in subparagraph (A)(iii) which is paid with respect to any employer security which is allocated to a p£u*ticipant shall not be treated as an applicable dividend unless the plan provides that employer securities with a fair market value of not less than the amount of such dividend are allocated to such participant for the year which (but for subparagraph (A)) such dividend would have been allocated to such participant. "(3) APPLICABLE EMPLOYER SECURITIES. —For purposes of this subsection, the term 'applicable employer securities' means, with respect to any dividend, employer securities which are held on the record date for such dividend by an employee stock ownership plan which is maintained by— "(A) the corporation paying such dividend, or "(B) any other corporation which is a member of a con- trolled group of corporations (within the meaning of section 409(1)(4)) which includes such corporation. "(4) TIME FOR DEDUCTION. — "(A) IN GENERAL.—The deduction under paragraph (1) shall be allowable in the taxable year of the corporation in which the dividend is paid or distributed to a participant or his beneficiary.

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