ing the 1-year period ending on the
date of the acquisition of qualified
employer securities by the plan, is a
5-percent shareholder of the employer
maintaining the plan,
the plan shall be treated as having distrib-
uted (at the time of such allocation) to
such person or shareholder the amount so
allocated.
‘‘(ii) 
5-PERCENT
SHAREHOLDER.—
For purposes of clause (i), the term ‘5-per-
cent shareholder’ means any person who
owns (directly or through the application
of section 318(a)) more than 5 percent
of—
‘‘(I) any class of outstanding
stock of the corporation which issued
such qualified employer securities or
of any corporation which is a member
of the same controlled group of cor-
porations (within the meaning of sec-
tion 409(l)(4)) as such corporation, or
‘‘(II) the total value of any class
of outstanding stock of any such cor-
poration; and
For purposes of the preceding sentence,
section 318(a) shall be applied without re-
gard to the exception in paragraph
(2)(B)(i) thereof.
‘‘(iii) CROSS REFERENCE.—
‘‘For excise tax on allocations described in clause
(i), see section 4979A.’’
(c) CONFORMING AMENDMENTS.—
(1) Section 401(a)(1) of such Code is amended
by inserting ‘‘or by a charitable remainder trust pur-
suant to a qualified gratuitous transfer (as defined
in section 664(d)(3)(A)),’’ after ‘‘stock bonus
plans),’’.
(2) Section 404(a)(9) of such Code is amended
by inserting after subparagraph (C) the following
new subparagraph:
‘‘(D) A qualified gratuitous transfer (as
defined in section 664(d)(3)(A)) shall have no
effect on the amount or amounts otherwise de-
ductible under paragraph (3) or (7) or under
this paragraph.’’
(3) Section 415(c)(6) of such Code is amended
by adding at the end thereof the following new sen-
tence:
‘‘The amount of any qualified gratuitous transfer
(as defined in section 664(d)(3)(A)) allocated to a
participant for any limitation year shall not exceed
the limitations imposed by this section, but such
amount shall not be taken into account in determin-
ing whether any other amount exceeds the limita-
tions imposed by this section.’’
(4) Section 415(e) of such Code is amended—
(A) by redesignating paragraph (6) as
paragraph (7), and
(B) by inserting after paragraph (5) the
following new paragraph:
‘‘(6) SPECIAL
RULE
FOR
QUALIFIED
GRATU-
ITOUS TRANSFERS.—Any qualified gratuitous trans-
fer of qualified employer securities (as defined by
section 664(d)(3)) shall not be taken into account in
calculating, and shall not be subject to, the limita-
tions provided in this subsection.’’
(5) Paragraph (3) of section 644(e) of such
Code is amended to read as follows:
‘‘(3) acquired by a charitable remainder annuity
trust (as defined in section 664(d)(1)) or a chari-
table remainder unitrust (as defined in sections
664(d)(2) and (4)), or’’.
(6) Subparagraph (B) of section 664(d)(1) of
such Code and subparagraph (B) of section
664(d)(2) of such Code are each amended by insert-
ing ‘‘and other than qualified gratuitous transfers
described in subparagraph (C)’’ after ‘‘subparagraph
(A)’’.
(7) Paragraph (4) of section 674(b) of such
Code is amended by inserting before the period ‘‘or
to an employee stock ownership plan (as defined in
section 4975(e)(7)) in a qualified gratuitous transfer
(as defined in section 664(d)(3))’’.
(8)(A) Section 2055(a) of such Code is amend-
ed—
(i) by striking ‘‘or’’ at the end of para-
graph (3),
(ii) by striking the period at the end of
paragraph (4) and inserting ‘‘; or’’, and
(iii) by inserting after paragraph (4) the
following new paragraph:
‘‘(5) to an employee stock ownership plan if
such transfer qualifies as a qualified gratuitous
transfer of qualified employer securities within the
meaning of section 664(d)(3).’’
(B) Clause (ii) of section 2055(e)(3)(C) of such
Code is amended by striking ‘‘section 664(d)(3)’’
and inserting ‘‘section 664(d)(4)’’.
(9) Paragraph (8) of section 2056(b) of such
Code is amended to read as follows:
‘‘(8) SPECIAL RULE FOR CHARITABLE REMAIN-
DER TRUSTS.—
‘‘(A) 
IN
GENERAL.—If 
the 
surviving
spouse of the decedent is the only beneficiary of
a qualified charitable remainder trust who is
not a charitable beneficiary nor an ESOP bene-
ficiary, paragraph (1) shall not apply to any in-
terest in such trust which passes or has passed
from the decedent to such surviving spouse.
‘‘(B) DEFINITIONS.—For purposes of sub-
paragraph (A)—
‘‘(i) CHARITABLE BENEFICIARY.—The
term ‘charitable beneficiary’ means any
beneficiary which is an organization de-
scribed in section 170(c).
‘‘(ii) ESOP BENEFICIARY.—The term
‘ESOP beneficiary’ means any beneficiary
which is an employee stock ownership plan
(as defined in section 4975(e)(7)) that
holds a remainder interest in qualified em-
ployer securities (as defined in section
664(d)(3)) to be transferred to such plan
in a qualified gratuitous transfer (as de-
fined in section 664(d)(3)).