Page:United States Statutes at Large Volume 98 Part 1.djvu/935

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 887

SEC. 532. EXCLUSION OF CERTAIN REDUCTIONS IN TUITION FROM GROSS INCOME.

(a) IN GENERAL.—Section 117 (relating to scholarships and fellowship grants) is amended by adding at the end thereof the following new subsection:

26 USC 117.

"(d) QUALIFIED TUITION REDUCTIONS.—

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"(1) IN GENERAL.—Gross income shall not include any qualified tuition reduction., .,, "(2) QUALIFIED TUITION REDUCTION.—For purposes of this subsection, the term 'qualified tuition reduction' means the amount of any reduction in tuition provided to an employee of an organization described in section 170(b)(l)(A)(ii) for the education (below the graduate level) at such organization (or another organization described in section 170(b)(l)(A)(ii)) of— "(A) such employee, or "(B) any person treated as an employee (or whose use is treated as an employee use) under the rules of section 132(f). Ante, p. 877. "(3) REDUCTION MUST NOT DISCRIMINATE IN FAVOR OF HIGHLY COMPENSATED, ETC.—Paragraph (1) shall apply with respect to

any qualified tuition reduction provided with respect to any officer, owner, or highly compensated employee only if such reduction is available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of officers, owners, or highly compensated employees." (b) EFFECTIVE DATE.—The amendment made by this section shall 26 USC 117 note. apply to qualified tuition reductions (as defined in section 117(d)(2) of the Internal Revenue Code of 1954) for education furnished after Supra. June 30, 1985, in taxable years ending after such date. .U:f-\

Subtitle D—Employee Stock Ownership Plans SEC. 541. NONRECOGNITION OF GAIN ON STOCK SOLD TO EMPLOYEE STOCK OWNERSHIP PLANS OR CERTAIN COOPERATIVES IF QUALIFIED REPLACEMENT PROPERTY ACQUIRED. (a) IN GENERAL.—Part III of subchapter 0 of chapter 1 (relating to nontaxable exchanges), as amended by this Act, is amended by adding at the end thereof the following new section: "SEC. 1042. SALES OF STOCK TO STOCK OWNERSHIP PLANS OR CERTAIN 26 USC 1042. COOPERATIVES. "(a) NONRECOGNITION OF GAIN.—If^

"(1) the taxpayer elects the application of this section with respect to any sale of qualified securities, "(2) the taxpayer purchases qualified replacement property within the replacement period, and "(3) the requirements of subsection (b) are met with respect to such sale, then the gain (if any) on such sale shall be recognized only to the extent that the amount realized on such sale exceeds the cost to the taxpayer of such qualified replacement property. "(b) REQUIREMENTS TO QUALIFY FOR NONRECOGNITION.—A sale of qualified securities meets the requirements of this subsection if—

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