Source: http://www.law.cornell.edu/uscode/text/26/4979A?qt-us_code_tabs=2
Timestamp: 2014-11-27 12:18:14
Document Index: 483676159

Matched Legal Cases: ['§ 4979', '§ 4979', '§ 4979', '§ 1172', '§ 1854', '§ 7304', '§ 1704', '§ 1530', '§ 656', '§ 656', '§ 656', '§ 656', '§ 1530', '§ 1530', '§ 1530', '§ 7304', '§ 7304', '§ 7304', '§ 1172', '§ 1172', '§ 1854']

26 U.S. Code § 4979A - Tax on certain prohibited allocations of qualified securities | LII / Legal Information Institute
U.S. Code › Title 26 › Subtitle D › Chapter 43 › § 4979A 26 U.S. Code § 4979A - Tax on certain prohibited allocations of qualified securities
Imposition of tax If—
there is a prohibited allocation of qualified securities by any employee stock ownership plan or eligible worker-owned cooperative,
there is an allocation described in section 664
(g)(5)(A),
there is any allocation of employer securities which violates the provisions of section 409
(p), or a nonallocation year described in subsection (e)(2)(C) with respect to an employee stock ownership plan, or
any synthetic equity is owned by a disqualified person in any nonallocation year,
there is hereby imposed a tax on such allocation or ownership equal to 50 percent of the amount involved.
Prohibited allocation For purposes of this section, the term “prohibited allocation” means—
any allocation of qualified securities acquired in a sale to which section 1042 applies which violates the provisions of section 409
(n), and
any benefit which accrues to any person in violation of the provisions of section 409
Liability for tax The tax imposed by this section shall be paid—
in the case of an allocation referred to in paragraph (1) or (2) of subsection (a), by—
the employer sponsoring such plan, or
which made the written statement described in section 664
(g)(1)(E) or in section 1042
(b)(3)(B) (as the case may be), and
in the case of an allocation or ownership referred to in paragraph (3) or (4) of subsection (a), by the S corporation the stock in which was so allocated or owned.
Special statute of limitations for tax attributable to certain allocations The statutory period for the assessment of any tax imposed by this section on an allocation described in subsection (a)(2) of qualified employer securities shall not expire before the date which is 3 years from the later of—
the 1st allocation of such securities in connection with a qualified gratuitous transfer (as defined in section 664
(g)(1)), or
the date on which the Secretary is notified of the allocation described in subsection (a)(2).
Definitions Except as provided in paragraph (2), terms used in this section have the same respective meanings as when used in sections 409 and 4978.
Special rules relating to tax imposed by reason of paragraph (3) or (4) of subsection (a) (A)
Prohibited allocations The amount involved with respect to any tax imposed by reason of subsection (a)(3) is the amount allocated to the account of any person in violation of section 409
(p)(1).
Synthetic equity The amount involved with respect to any tax imposed by reason of subsection (a)(4) is the value of the shares on which the synthetic equity is based.
Special rule during first nonallocation year For purposes of subparagraph (A), the amount involved for the first nonallocation year of any employee stock ownership plan shall be determined by taking into account the total value of all the deemed-owned shares of all disqualified persons with respect to such plan.
Statute of limitations The statutory period for the assessment of any tax imposed by this section by reason of paragraph (3) or (4) of subsection (a) shall not expire before the date which is 3 years from the later of—
the allocation or ownership referred to in such paragraph giving rise to such tax, or
the date on which the Secretary is notified of such allocation or ownership.
(Added and amended Pub. L. 99–514, title XI, § 1172(b)(2), title XVIII, § 1854(a)(9)(A),Oct. 22, 1986, 100 Stat. 2514, 2877; Pub. L. 101–239, title VII, § 7304(a)(2)(D),Dec. 19, 1989, 103 Stat. 2353; Pub. L. 104–188, title I, § 1704(t)(22),Aug. 20, 1996, 110 Stat. 1888; Pub. L. 105–34, title XV, § 1530(c)(15)–(17), Aug. 5, 1997, 111 Stat. 1079, 1080; Pub. L. 107–16, title VI, § 656(c),June 7, 2001, 115 Stat. 134.)
2001—Subsec. (a). Pub. L. 107–16, § 656(c)(1), added pars. (3) and (4) and, in concluding provisions, substituted “there is hereby imposed a tax on such allocation or ownership equal to 50 percent of the amount involved.” for “there is hereby imposed a tax on such allocation equal to 50 percent of the amount involved.”
Subsec. (c). Pub. L. 107–16, § 656(c)(2), amended heading and text of subsec. (c) generally. Prior to amendment, text read as follows: “The tax imposed by this section shall be paid by—
“(1) the employer sponsoring such plan, or
“(2) the eligible worker-owned cooperative,
(b)(3)(B) (as the case may be).”
Subsec. (e). Pub. L. 107–16, § 656(c)(3), amended heading and text of subsec. (e) generally. Prior to amendment, text read as follows: “Terms used in this section have the same respective meaning as when used in section 4978.”
1997—Subsec. (a). Pub. L. 105–34, § 1530(c)(15), amended heading and text of subsec. (a) generally. Prior to amendment, text read as follows: “If there is a prohibited allocation of qualified securities by any employee stock ownership plan or eligible worker-owned cooperative, there is hereby imposed a tax on such allocation equal to 50 percent of the amount involved.”
Subsec. (c). Pub. L. 105–34, § 1530(c)(16), amended heading and text of subsec. (c) generally. Prior to amendment, text read as follows: “The tax imposed by this section shall be paid by—
which made the written statement described in section 1042
(b)(3)(B).”
Subsecs. (d), (e). Pub. L. 105–34, § 1530(c)(17), added subsec. (d) and redesignated former subsec. (d) as (e).
1996—Subsec. (c). Pub. L. 104–188amended directory language of Pub. L. 101–239, § 7304(a)(2)(D)(ii). See 1989 Amendment note below.
1989—Subsec. (b)(1). Pub. L. 101–239, § 7304(a)(2)(D)(i), struck out “or section 2057” after “section 1042”.
Subsec. (c). Pub. L. 101–239, § 7304(a)(2)(D)(ii), as amended by Pub. L. 104–188, struck out “or section 2057
(d)” after “section 1042
(b)(3)(B)” in concluding provisions.
1986—Subsec. (b)(1). Pub. L. 99–514, § 1172(b)(2)(A), inserted reference to section 2057.
Subsec. (c). Pub. L. 99–514, § 1172(b)(2)(B), inserted reference to section 2057
Amendment by Pub. L. 107–16applicable to plan years beginning after Dec. 31, 2004, except that in the case of any employee stock ownership plan established after Mar. 14, 2001, or established on or before such date if employer securities held by the plan consist of stock in a corporation with respect to which an election under section 1362
Amendment by Pub. L. 101–239applicable to estates of decedents dying after Dec. 19, 1989, see section 7304(a)(3) ofPub. L. 101–239, set out as a note under section 409 of this title.
Amendment by section 1172(b)(2) ofPub. L. 99–514applicable to sales after Oct. 22, 1986, with respect to which election is made by executor of an estate who is required to file the return of the tax imposed by this title on a date (including extensions) after Oct. 22, 1986, see section 1172(c) ofPub. L. 99–514, set out as a note under section 409 of this title.
Pub. L. 99–514, title XVIII, § 1854(a)(9)(D),Oct. 22, 1986, 100 Stat. 2878, provided that: “The amendments made by this paragraph [enacting this section and amending section 1042 of this title] shall apply to sales of securities after the date of the enactment of this Act [Oct. 22, 1986].”