Ill STAT. 1066 PUBLIC LAW 105-34—AUG. 5, 1997 is considered as owning within the meaning of section 318(a)(1)) more than 5 percent of the outstanding stock of the corporation on any day during the taxable year of such corporation.". (B) CONFORMING AMENDMENTS.— Section 4975(d) is amended— (i) by striking "The prohibitions" and inserting "Except as provided in subsection (f)(6), the prohibitions", and (ii) by striking the last two sentences thereof. (2) AMENDMENT TO ERISA. —Section 408(d) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)) is amended to read as follows: "(d)(1) Section 407(b) and subsections (b), (c), and (e) of this section shall not apply to a transaction in which a plan directly or indirectly— "(A) lends any part of the corpus or income of the plan to, "(B) pays any compensation for personal services rendered to the plan to, or "(C) acquires for the plan any property from, or sells any property to, any person who is with respect to the plan an owner-employee (as defined in section 401(c)(3) of the Internal Revenue Code of 1986), a member of the family (as defined in section 267(c)(4) of such Code) of any such owner-employee, or any corporation in which any such owner-employee owns, directly or indirectly, 50 percent or more of the total combined voting power of all classes of stock entitled to vote or 50 percent or more of the total value of shares of all classes of stock of the corporation. "(2)(A) For purposes of paragraph (1), the following shall be treated as owner-employees: "(i) A shareholder-employee. "(ii) A participant or beneficiary of an individual retirement plan (as defined in section 7701(a)(37) of the Internal Revenue Code of 1986). "(iii) An employer or association of employees which establishes such an individual retirement plan under section 408(c) of such Code. "(B) Paragraph (1)(C) shall not apply to a transaction which consists of a sale of employer securities to an employee stock ownership plan (as defined in section 407(d)(6)) by a shareholderemployee, a member of the family (as defined in section 267(c)(4) of such Code) of any such owner-employee, or a corporation in which such a shareholder-employee owns stock representing a 50 percent or greater interest described in paragraph (1). "(3) For purposes of paragraph (2), the term 'shareholderemployee' meeins an employee or officer of eui S corporation (as defined in section 1361(a)(1) of such Code) who owns (or is considered as owning within the meaning of section 318(a)(1) of such Code) more than 5 percent of the outstanding stock of the corporation on any day during the tsixable year of such corporation.". 26 USC 409 note. (c) EFFECTIVE DATE. —The amendments made by this section shall apply to taxable years beginning after December 31, 1997.
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