Page:United States Statutes at Large Volume 118.djvu/1464

 118 STAT. 1434 PUBLIC LAW 108–357—OCT. 22, 2004 (2) SUBSECTION (b).—The amendments made by subsection (b) shall apply to elections and terminations made after December 31, 2004. SEC. 232. INCREASE IN NUMBER OF ELIGIBLE SHAREHOLDERS TO 100. (a) IN GENERAL.—Section 1361(b)(1)(A) (defining small business corporation) is amended by striking ‘‘75’’ and inserting ‘‘100’’. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years beginning after December 31, 2004. SEC. 233. EXPANSION OF BANK S CORPORATION ELIGIBLE SHARE HOLDERS TO INCLUDE IRAS. (a) IN GENERAL.—Section 1361(c)(2)(A) (relating to certain trusts permitted as shareholders) is amended by inserting after clause (v) the following new clause: ‘‘(vi) In the case of a corporation which is a bank (as defined in section 581), a trust which constitutes an individual retirement account under section 408(a), including one designated as a Roth IRA under section 408A, but only to the extent of the stock held by such trust in such bank as of the date of the enactment of this clause.’’. (b) TREATMENT AS SHAREHOLDER.—Section 1361(c)(2)(B) (relating to treatment as shareholders) is amended by adding at the end the following new clause: ‘‘(vi) In the case of a trust described in clause (vi) of subparagraph (A), the individual for whose ben efit the trust was created shall be treated as a share holder.’’. (c) SALE OF BANK STOCK IN IRA RELATING TO S CORPORATION ELECTION EXEMPT FROM PROHIBITED TRANSACTION RULES.—Section 4975(d) (relating to exemptions) is amended by striking ‘‘or’’ at the end of paragraph (14), by striking the period at the end of paragraph (15) and inserting ‘‘; or’’, and by adding at the end the following new paragraph: ‘‘(16) a sale of stock held by a trust which constitutes an individual retirement account under section 408(a) to the individual for whose benefit such account is established if— ‘‘(A) such stock is in a bank (as defined in section 581), ‘‘(B) such stock is held by such trust as of the date of the enactment of this paragraph, ‘‘(C) such sale is pursuant to an election under section 1362(a) by such bank, ‘‘(D) such sale is for fair market value at the time of sale (as established by an independent appraiser) and the terms of the sale are otherwise at least as favorable to such trust as the terms that would apply on a sale to an unrelated party, ‘‘(E) such trust does not pay any commissions, costs, or other expenses in connection with the sale, and ‘‘(F) the stock is sold in a single transaction for cash not later than 120 days after the S corporation election is made.’’. (d) CONFORMING AMENDMENT.—Section 512(e)(1) is amended by inserting ‘‘1361(c)(2)(A)(vi) or’’ before ‘‘1361(c)(6)’’. 26 USC 1361 note. 26 USC 1362 note.

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