Page:United States Statutes at Large Volume 95.djvu/322

 95 STAT. 296

26 USC 46.

26 USC 48.

PUBLIC LAW 97-34—AUG. 13, 1981 SEC. 332. TERMINATION OF THE PORTION OF THE INVESTMENT CREDIT ATTRIBUTABLE TO EMPLOYEE PLAN PERCENTAGE. (a) IN GENERAL.—Subparagraph (E) of section 46(a)(2) (relating to employee plan percentage) is amended— (1) by striking out "December 31, 1983" in clauses (i) and (ii) and inserting in lieu thereof "December 31, 1982", (2) by striking out "and" at the end of clause (i), (3) by striking out the period at the end of clause (ii) and inserting in lieu thereof ", and", and (4) by inserting after clause (ii) the following new clause: "(iii) with respect to any period beginning after December 31, 1982, zero." (b) TECHNICAL AMENDMENT.—Clause (i) of section 48(n)(l)(A) (relating to requirements for allowance of employee plan percentage) is amended by striking out "equal to" and inserting in lieu thereof "which does not exceed". (c) EFFECTIVE DATES.—

26 USC 46 note. 26 USC 48 note.

26 USC 404.

(1) The amendments made by subsection (a) shall be effective on the date of enactment of this Act. (2) The amendment made by subsection (b) shall apply to qualified investments made after December 31, 1981. SEC. 333. TAX TREATMENT OF CONTRIBUTIONS ATTRIBUTABLE TO PRINCIPAL AND INTEREST PAYMENTS IN CONNECTION WITH AN EMPLOYEE STOCK OWNERSHIP PLAN. (a) DEDUCTIBILITY.—Section 404(a) (relating to deductions for employer contributions to an employees' trust) is amended by adding at the end thereof the following new paragraph: "(10) CERTAIN CONTRIBUTIONS TO EMPLOYEE STOCK OWNERSHIP PLANS.— "(A) PRINCIPAL PAYMENTS.—Notwithstanding the provi-

sions of paragraphs (3) and (7), if contributions are paid into a trust which forms a part of an employee stock ownership plan (as described in section 4975(e)(7)), and such contributions are, on or before the time prescribed in paragraph (6), applied by the plan to the repayment of the principal of a loan incurred for the purpose of acquiring qualifying employer securities (as described in section 4975(e)(8)), such contributions shall be deductible under this paragraph for the taxable year determined under paragraph (6). The amount deductible under this paragraph shall not, however, exceed 25 percent of the compensation otherwise paid or accrued during the taxable year to the employees under such employee stock ownership plan. Any amount paid into such trust in any taxable year in excess of the amount deductible under this paragraph shall be deductible in the succeeding taxable years in order of time to the extent of the difference between the amount paid and deductible in each such succeeding year and the maximum amount deductible for such year under the preceding sentence. "(B) INTEREST PAYMENT.—Notwithstanding the provisions of paragraphs (3) and (7), if contributions are made to an employee stock ownership plan (described in subparagraph (A)) and such contributions are applied by the plan to the repayment of interest on a loan incurred for the purpose of acquiring qualifying employer securities (as described in subparagraph (A)), such contributions shall be deductible for

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