Page:United States Statutes at Large Volume 98 Part 1.djvu/939

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 891

(b) DENIAL OF PARTIAL EXCLUSION.—Section 116 (relating to par-

26 USC 116.

tial exclusion of dividends) is amended by adding at the end thereof the following new subsection: "(e) DIVIDENDS FROM EMPLOYEE STOCK OWNERSHIP PLANS.—Sub-

section (a) shall not apply to any dividend described in section 404(k)."

Ante, p. 890.

(c) No WITHHOLDING ON DIVIDEND DISTRIBUTION.—Subparagraph

(B) of section 3405(d)(1) (relating to designated distributions) is amended— (1) by striking out "and" at the end of clause (i), (2) by striking out the period at the end of clause (ii) and inserting in lieu thereof ", or", and (3) by adding at the end thereof the following new clause: "(iii) any distribution described in section 404(k)(2)." (d) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act. SEC. 543. EXCLUSION OF INTEREST ON LOANS USED TO FINANCE ACQUISITION OF EMPLOYER SECURITIES BY AN ESOP. (a) IN GENERAL.—Part III of subchapter B of chapter 1 (relating to items excluded from gross income), as amended by this Act, is amended by redesignating section 133 as section 134 and by inserting after section 132 the following new section: "SEC. 133. INTEREST ON CERTAIN LOANS USED TO ACQUIRE EMPLOYER SECURITIES. "(a) IN GENERAL.—Gross income does not include 50 percent of the interest received by— "(1) a bank (within the meaning of section 581), "(2) an insurance company to which subchapter L applies, or "(3) a corporation actively engaged in the business of lending money, with respect to a securities acquisition loan.

Post, p. 963.

26 USC 404 note.

26 USC 134. ^"^^' P- ^'^'^• 26 USC 133.

"(b) SECURITIES ACQUISITION LOAN.—

"(1) IN GENERAL.—For purposes of this section, the term 'securities acquisition loan' means any loan to a corporation, or to an employee stock ownership plan, to the extent that the proceeds are used to acquire employer securities (within the meaning of section 409(1)) for the plan. Ante, p. 852. "(2) LOANS BETWEEN RELATED PERSONS.—The term 'securities acquisition loan' shall not include— "(A) any loan made between corporations which are members of the same controlled group of corporations, or "(B) any loan made between an employee stock ownership plan and any person that is— "(i) the employer of any employees who are covered by the plan; or "(ii) a member of a controlled group of corporations which includes such employer. "(3) CONTROLLED GROUP OF CORPORATIONS.—For purposes of

this paragraph, the term 'controlled group of corporations' has the meaning given such term by section 409(1)(4). "(c) EMPLOYEE STOCK OWNERSHIP PLAN.—For purposes of this section, the term 'employee stock ownership plan' has the meaning given to such term by section 4975(e)(7)."

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