Page:United States Statutes at Large Volume 88 Part 1.djvu/1035

 88 STAT. ]

PUBLIC LAW 93-406-SEPT. 2, 1974

" (B) the denominator of which is the number of calendar years of active participation by the employee in such plan, shall be treated as a gain from the sale or exchange of a capital asset held for more than 6 months. For purposes of computing the fraction described in this paragraph and the fraction under subsection (e)(4)(E), the Secretary or his delegate may prescribe regulations under which plan years may be used in lieu of calendar years. For purposes of this paragraph, in the case of an individual who is an employee without regard to section 401(c) (1), determination of whether or not any distribution is a lump sum distribution shall be made without regard to the requirement that an election be made under subsection (e)(4)(B), but no distribution to any taxpayer other than an individual, estate, or trust may be treated as a lump sum distribution under this paragraph." (2) AMENDMENT or SECTION 4 03.—That part of paragraph (2) of section 403(a) which follows clause (ii) of subparagraph (A) thereof is amended to read as follows: "(iii) a lump sum distribution (as defined in section 402(e)(4)(A)) is paid to the recipient, so much of the total taxable amount (as defined in section 402(e)(4)(D)) of such distribution as is equal to the product of such total taxable amount multiplied by the fraction described in section 402(a)(2) shall be treated as a gain from the sale or exchange of a capital asset held for more than 6 months. For purposes of this paragraph, in the case of an individual who is an employee without regard to section 401 (c)(1), determination of whether or not any distribution is a lump sum distribution shall be made without regard to the requirement that an election be made under subsection (e) (4)(B) of section 402, but no distribution to any taxpayer other than an individual, estate, or trust may be treated as a lump sum distribution under this paragraph.

991

Regulations. Ante, p. 987.

26 USC 401.

^6 USC 403. Ante, p. 987.

^"^^' P- ^^°- r;i.

" (B) CROSS REFERENCE.—

"For imposition of separate tax on ordinary income portion of lump sum distribution, see section 402(e).". (c) CONFORMING AMENDMENTS. —

(1) Subparagraph (C) of section 402(a)(3) is repealed. (2) Paragraph (5) (as in effect on December 31, 1973) of section 402(a) is repealed. (3) Section 72 is amended by striking out subsection (n) thereof and by redesignating subsections (o) and (p) as (n) and (o), respectively. (4) The second sentence of section 4 6 (a)(3) and the second sentence of section 50A(a)(3) are each amended by inserting after "tax preferences)," the following: "section 402(e) (relating to tax on lump sum distributions),". (5) The third sentence of section 901(a) is amended by inserting "against the tax imposed by section 402(e) (relating to tax on lump sum distributions)," before "against the tax imposed by section 531". ' (6) Subsection _ 1304(b)(2) (relating to special rules) is amended by striking out paragraph (2) and by redesignating paragraphs (3), (4), (5), and (6) as paragraphs (2), (3), (4), and (5), respective! y. (7) Subparagraph (A) of section 56(a)(2) and paragraph (1) of section 56(c) are each amended by inserting before "531" the following: "402(e),".

^e^ uTc%02. 26 USC 72. 26 USC 46. 26 USC so. ^^ "^^ ^°^26 USC S3i. 26 USC i304.

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