100 STAT. 2874
PUBLIC LAW 99-514—OCT. 22, 1986
"(A) the plan shall be treated as having distributed to the person described in paragraph (1) the amount allocated to the account of such person in violation of paragraph (1) at 't»' the time of such allocation, "(B) the provisions of section 4979A shall apply, and
"(C) the statutory period for the assessment of any tax imposed by section 4979A shall not expire before the date "•' -'-^ which is 3 years from the later of— "(i) the 1st allocation of employer securities in connection with a sale to the plan to which section 1042 applies, or "(ii) the date on which the Secretary is notified of '^' such failure. "(3) DEFINITIONS AND SPECIAL RULES.—For purposes of this subsection— "(A) LINEAL DESCENDANTS.—Paragraph (l)(A)(ii) shall not apply to any individual if— "(i) such individual is a lineal descendant of the taxpayer, and ,„...^ "(ii) the aggregate amount allocated to the benefit of "y ': all such lineal descendants during the nonallocation period does not exceed more than 5 percent of the ^, employer securities (or amounts allocated in lieu thereof) held by the plan which are attributable to a sale to the plan by any person related to such descend,,: ants (within the meaning of section 267(c)(4)) in a trans.*'. action to which section 1042 applied. "(B) 25-PERCENT SHAREHOLDERS.—A person shall be treated as failing to meet the stock ownership limitation under paragraph (1)(B) if such person fails such limitation— . "(i) at any time during the 1-year period ending on Hr, the date of sale of qualified securities to the plan or cooperative, or
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"(ii) on the date as of which qualified securities are sdi allocated to participants in the plan or cooperative. "(C) NONALLOCATION PERIOD.—The term 'nonallocation — period' means the 10-year period beginning on the later <.-. of"(i) the date of the sale of the qualified securities, or . ^^q„<. "(ii) the date of the plan allocation attributable to the final payment of acquisition indebtedness incurred in V., ' connection with such sale." (B) Section 1042(b)(3) is amended by striking out paragraph (3) and redesignating paragraph (4) as paragraph (3). (C) The amendments made by this paragraph apply to sales of securities after the date of the enactment of this Act. •m (4) Section 1042(c)(1) (defining qualified securities) is amended— s3. (A) by striking out "securities outstanding that are" in subparagraph (A) and inserting in lieu thereof "stock fe&iiv outstanding that is", flqBTgE (B) by inserting "and" at the end of subparagraph (A), and irmm c (C) by striking out subparagraph (B) and redesignating subparagraph (C) as subparagraph (B).
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