PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 1079 " (B) DEFINITIONS. —For purposes of subparagraph (A)— "(i) CHARITABLE BENEFICIARY.—The term 'charitable beneficiary mesuis any beneficiary which is an organization described 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 employer securities (as defined in section 664(g)(4)) to be transferred to such plan in a qualified gratuitous transfer (as defined in section 664(g)(1)). "(iii) QUALIFIED CHARITABLE REMAINDER TRUST.— The term 'qualified charitable remainder trust' mesins a charitable remainder annuity trust or a charitable remainder unitrust (described in section 664).". (9) Section 4947(b) is amended by inserting after paragraph (3) the following new paragraph: "(4) SECTION SOT.— The provisions of section 507(a) shall not apply to a trust which is described in subsection (a)(2) by reason of a distribution of qualified employer securities (as defined in section 664(g)(4)) to an employee stock ownership plan (as defined in section 4975(e)(7)) in a quaUfied gratuitous transfer (as defined by section 664(g)).". (10) The last sentence of section 4975(e)(7) is amended by inserting "and section 664(g)" after "section 409(n)". (11) Subsection (a) of section 4978 is amended— (A) by inserting "or acquired any qualified employer securities in a qualified gratuitous transfer to which section 664(g) applied" after "section 1042 applied", and (B) by inserting before the comma at the end of paragraph (2) "60 percent of the total value of all employer securities as of such disposition in the case of any qualified employer securities acquired in a qualified gratuitous transfer to which section 664(g) applied)". (12) Paragraph (2) of section 4978(b) is amended— (A) by inserting "or acquired in the qualified gratuitous transfer to which section 664(g) applied" after "section 1042 applied", and (B) by inserting "or to which section 664(g) applied" after "section 1042 applied" in subparagraph (A) thereof. (13) Subsection (c) of section 4978 is amended by striking "written statement" and all that follows and inserting "written statement described in section 664(g)(1)(E) or in section 1042(b)(3) (as the case may be).". (14) Paragraph (2) of section 4978(e) is amended by striking the period and inserting "; except that such section shall be applied without regard to subparagraph (B) thereof for purposes of applying this section and section 4979A with respect to securities acquired in a qualified gratuitous transfer (as defined in section 664(g)(1)).". (15) Subsection (a) of section 4979A is amended to read as follows: "(a) IMPOSITION OF TAX. —I f— "(1) there is a prohibited allocation of qualified securities by any employee stock ownership plan or eligible worker-owned cooperative, or "(2) there is an allocation described in section 664(g)(5)(A),
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