Page:United States Statutes at Large Volume 88 Part 1.djvu/1021

 88 STAT. ]

PUBLIC LAW 93-406-SEPT. 2, 1974

977

the date on which the prohibited transaction occurs and ending on the earlier of— " (A) the date of mailing of a notice of deficiency pursuant to section 6212, with respect to the tax imposed by subsec- 26 USC 6212. tion (a), or " (B) the date on which correction of the prohibited transaction is completed. "(3) SALE OR EXCHANGE; ENCUMBERED PROPERTY.—A transfer of real or personal property by a disqualified person to a plan shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the plan assumes or if it is subject to a mortgage or similar lien which a disqualified person placed on the property within the 10-year period ending on the date of the transfer. "(4) AMOUNT INVOLVED.—The term 'amount involved' means, with respect to a prohibited transaction, the greater of the amount of money and the fair market value of the other property given or the amount of money and the fair market value of the other property received; except that, in the case of services described in paragraphs (2) and (10) of subsection (d) the amount involved shall be only the excess compensation. For purposes of the preceding sentence, the fair market value— ^^ir market " (A) in the case of the tax imposed by subsection (a), "^ "^* shall be determined as of the date on which the prohibited transaction occurs; and " (B) in the case of the tax imposed by subsection (b), shall be the highest fair market value during the correction period. "(5) CORRECTION.—The terms 'correction' and 'correct' mean, with respect to a prohibited transaction, undoing the transaction to the extent possible, but in any case placing the plan in a financial position not worse than that in which it would be if the disqualified person were acting under the highest fiduciary standards. "(6) CORRECTION PERIOD.—The term 'correction period' means, with respect to a prohibited transaction, the period beginning with the date on which the prohibited transaction occurs and ending 90 days after the date of mailing of a notice of deficiency with respect to the tax imposed by subsection (b) under section 6212, extended by— " (A) any period in which a deficiency cannot be assessed under section 6213(a), and " (B) any other period which the Secretary or his delegate determines is reasonable and necessary to bring about the correction of the prohibited transaction. " (g) APPLICATION OF SECTION.—This section shall not apply— "(1) in the case of a plan to which a guaranteed benefit policy (as defined in section 401(b)(2)(B) of the Employee Retirement Income Security Act of 1974) is issued, to any assets of the insur^"^^' P- ^74. ance company, insurance service, or insurance organization merely because of its issuance of such policy; "(2) to a governmental plan (within the meaning of section 4 1 4 (d)); or Ante, p. 925. "(3) to a church plan (within the meaning of section 414(e)) with respect to which the election provided by section 410(d) has ^"'^' P- ^^^• not been made. In the case of a plan which invests in any security issued by an investment company registered under the Investment Company Act of 1940, ^ ^ "^^"^ soa-si the assets of such plan shall be deemed to include such security but shall not, by reason of such investment, be deemed to include any assets of such company.

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