PUBLIC LAW 100-203—DEC. 22, 1987
101 STAT. 1330-401
' d> A;
"(A) IN GENERAL.—In the case of any failure by any person to pay on the date prescribed therefor any amount required by this section, there shall be imposed on such "^"' person a penalty of 10 percent of the underpayment. For ' purposes of the preceding sentence, the term 'underpayment' means the excess of the amount of the "> •>' i payment required under this section over the amount (if any) of such payment paid on or before the date prescribed
- • ' " therefor.
- N > "(B)
NEGUGENCE
AND
FRAUD
PENALTIES
MADE
AP-
pla.r, PUCABLE.—For purposes of section 6653, any payment re• ypivo-i quired by this section shall be treated as a tax. "(C) WILLFUL **° FAILURE.—If any partnership or S cor^ poration willfully fails to comply with the requirements of this section, section 444 shall cease to apply with respect to such partnership or S corporation. "(g) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the provisions of this section and section 280H, including regulations for annualizing the income and applicable payments of an entity if the base year is a taxable year of less than 12 months." (2) CONFORMING AMENDMENT.—The table of sections for chapI ter 77 is amended by adding at the end thereof the following new item: .|j
"Sec. 7519. Required payments for entities electing not to have required taxable year." (c) DEDUCTION LIMITATIONS.—
(1) IN GENERAL.—Part IX of subchapter B of chapter 1 (relating to items not deductible) is amended by adding at the end thereof the following new section: "SEC. 280H. LIMITATION ON CERTAIN AMOUNTS PAID TO EMPLOYEE- 26 USC 280H. OWNERS BY PERSONAL SERVICE CORPORATIONS ELECTING ALTERNATIVE TAXABLE YEARS. ,^ ^ "(a) GENERAL RULE.—If^
"(1) an election by a personal service corporation under sec, tion 444 is in effect for a taxable year, and ^' "(2) such corporation does not meet the minimum distribution requirements of subsection (c) for such taxable year, then the deduction otherwise allowed under this chapter for applicable amounts paid or incurred by such corporation to employeeowners shall not exceed the maximum deductible amount. The preceding sentence shall not apply for purposes of subchapter G (relating to personal holding companies). "(b) CARRYOVER OF NONDEDUCTIBLE AMOUNTS.—If any amount is not allowed as a deduction for a taxable year under subsection (a), such amount shall be treated as paid or incurred in the succeeding taxable year. "(c) MINIMUM DISTRIBUTION REQUIREMENT.—For purposes of this section— "(1) IN GENERAL.—A personal service corporation meets the minimum distribution requirements of this subsection if the applicable amounts paid or incurred during the deferral period ' Copy read "WILLFULL"
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