Page:United States Statutes at Large Volume 95.djvu/318

 95 STAT. 292

PUBLIC LAW 97-34—AUG. 13, 1981 "(c) DEFINITIONS AND SPECIAL RULES.— "(1) REQUIREMENTS FOR CORPORATION.—A

26 USC 409A.

corporation meets

the requirements of this paragraph if it— (A) establishes a plan— "(i) which meets the requirements of section 409A, and "(ii) under which no more than one-third of the employer contributions for the taxable year are allocated to the group of employees consisting of— "(I) officers, "(II) shareholders owning more than 10 percent of the employer's stock (within the meaning of section 415(c)(6)(B)(iv)),or "(III) employees described in section 415(c)(6)(B)(iii),and "(B) agrees, as a condition for the allowance of the credit allowed by this subsection— "(i) to make transfers of employer securities to a tax credit employee stock ownership plan maintained by the corporation having an aggregate value of not more than the applicable percentage for the taxable year (determined under subsection (a)(2)) of the amount of the aggregate compensation (within the meaning of section 415(c)(3)) paid or accrued by the corporation during the taxable year, and "(ii) to make such transfers at the times prescribed in paragraph (2). "(2) TIMES FOR MAKING TRANSFERS.—The transfers required

under paragraph (I)(B) shall be made not later than 30 days after the due date (including extensions) for filing the return for the taxable year. "(3) ADJUSTMENTS TO CREDIT.—If the credit allowed under this section is reduced by a final determination, the employer may reduce the amount required to be transferred to the tax credit employee stock ownership plan under paragraph (1)(B) for the taxable year in which the final determination occurs or any succeeding taxable year by an amount equal to such reduction to the extent such reduction is not taken into account in any deduction allowed under section 404(i)(2). "(4) CERTAIN CONTRIBUTIONS OF CASH TREATED AS CONTRIBUTIONS OF EMPLOYER SECURITIES.—For purposes of this section, a

transfer of cash shall be treated as a transfer of employer securities if the cash is, under the tax credit employee stock ownership plan, used within 30 days to purchase employer securities. "(5) DISALLOWANCE OF DEDUCTION.—Except as provided in

section 404(i), no deduction shall be allowed under section 162, 212, or 404 for amounts required to be transferred to a tax credit employee stock ownership plan under this section. (6) EMPLOYER SECURITIES.—For purposes of this section, the term 'employer securities' has the meaning given such term in section 409 A(l). "(7) VALUE.—For purposes of this section, the term 'value' means— "(A) in the case of securities listed on a national exchange, the average of closing prices of such securities for the 2 consecutive trading days immediately preceding the date on which the securities are contributed to the plan, or

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