§ 4979A. Tax on certain prohibited allocations of qualified securities

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 title XI § 1172(b)(2) · 100 Stat. 2085

   Enacted · 26 U.S.C. § 4979A

   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

   Source evidence

   Code source credit
   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

   Enacted provision · exact public law section
   (2) Section 4979A is amended— (A) by inserting “or section 2057” after “section 1042” in subsection (b)(1) thereof, and (B) by inserting “or section 2057(d)” after “section 1042(b)(3)(B)” in subsection (c) thereof.

2. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 1172(b)(2)(A) · 100 Stat. 2085

   Inserted · 26 U.S.C. § 4979A(b)(1)

   Pub. L. 99–514, § 1172(b)(2)(A), inserted reference to section 2057

   Source evidence

   Code amendment note
   Subsec. (b)(1). Pub. L. 99–514, § 1172(b)(2)(A), inserted reference to section 2057.

   Enacted provision · exact public law section
   (A) by inserting “or section 2057” after “section 1042” in subsection (b)(1) thereof, and

3. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 1172(b)(2)(B) · 100 Stat. 2085

   Inserted · 26 U.S.C. § 4979A(c)

   Pub. L. 99–514, § 1172(b)(2)(B), inserted reference to section 2057(d)

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 99–514, § 1172(b)(2)(B), inserted reference to section 2057(d).

   Enacted provision · exact public law section
   (B) by inserting “or section 2057(d)” after “section 1042(b)(3)(B)” in subsection (c) thereof.

4. 1989

   Revenue Reconciliation Act of 1989

   Pub. L. 101–239 § 7304(a)(2)(D)(i) · 103 Stat. 2106

   Struck · 26 U.S.C. § 4979A(b)(1)

   Pub. L. 101–239, § 7304(a)(2)(D)(i), struck out “or section 2057” after “section 1042”

   Source evidence

   Code amendment note
   Subsec. (b)(1). Pub. L. 101–239, § 7304(a)(2)(D)(i), struck out “or section 2057” after “section 1042”.

   Enacted provision · exact public law section
   (i) by striking “or section 2057” in subsection (b)(1), and

5. 1989

   Revenue Reconciliation Act of 1989

   Pub. L. 101–239 § 7304(a)(2)(D)(ii) · 103 Stat. 2106

   1. Amended · 26 U.S.C. § 4979A(c)

      Pub. L. 101–239, § 7304(a)(2)(D)(ii), as amended by Pub. L. 104–188

   2. Struck · 26 U.S.C. § 4979A(c)

      Pub. L. 101–239, § 7304(a)(2)(D)(ii), as struck out “or section 2057(d)” after “section 1042(b)(3)(B)” in concluding provisions

   Source evidence

   Code amendment note
   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.

   Enacted provision · exact public law section
   (ii) by striking “or section 2057(d)” in subsection (c)(2).

6. 1996

   Small Business Job Protection Act of 1996

   Pub. L. 104–188 title I § 1704(t)(22) · 110 Stat. 1755

   Amended · 26 U.S.C. § 4979A(c)

   Pub. L. 104–188 amended directory language of Pub. L. 101–239, § 7304(a)(2)(D)(ii). See 1989 Amendment note below

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 104–188 amended directory language of Pub. L. 101–239, § 7304(a)(2)(D)(ii). See 1989 Amendment note below.

   Enacted provision · exact public law section
   (22) Clause (ii) of section 7304(a)(2)(D) of such Act is amended by striking “subsection (c)(2)” and inserting “subsection (c)”.

7. 1997

   Pub. L. 105–34 § 1530(c)(15) · 111 Stat. 788

   Amended · 26 U.S.C. § 4979A(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.”

   Source evidence

   Code amendment note
   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.”

   Enacted provision · exact public law section
   (15) Subsection (a) of section 4979A is amended to read as follows: “(a) Imposition of Tax.— If— “(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), there is hereby imposed a tax on such allocation equal to 50 percent of the amount involved.”.

8. 1997

   Pub. L. 105–34 § 1530(c)(16) · 111 Stat. 788

   Amended · 26 U.S.C. § 4979A(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—

   Source evidence

   Code amendment note
   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—

   “(1) the employer sponsoring such plan, or “(2) the eligible worker-owned cooperative, which made the written statement described in section 1042(b)(3)(B).”

   Enacted provision · exact public law section
   (16) Subsection (c) of section 4979A is amended to read as follows: “(c) Liability for Tax.— The tax imposed by this section shall be paid by— “(1) the employer sponsoring such plan, or “(2) the eligible worker-owned cooperative, which made the written statement described in section 664(g)(1)(E) or in section 1042(b)(3)(B) (as the case may be).”.

9. 1997

   Pub. L. 105–34 § 1530(c)(17) · 111 Stat. 788

   1. Added · 26 U.S.C. § 4979A(d); 26 U.S.C. § 4979A(e)

      Pub. L. 105–34, § 1530(c)(17), added subsec. (d)

   2. Redesignated · 26 U.S.C. § 4979A(d); 26 U.S.C. § 4979A(e)

      Pub. L. 105–34, § 1530(c)(17), redesignated former subsec. (d) as (e)

   Source evidence

   Code amendment note
   Subsecs. (d), (e). Pub. L. 105–34, § 1530(c)(17), added subsec. (d) and redesignated former subsec. (d) as (e).

   Enacted provision · exact public law section
   (17) Section 4979A is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection: “(d) 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— “(1) the 1st allocation of such securities in connection with a qualified gratuitous transfer (as defined in section 664(g)(1)), or “(2) the date on which the Secretary is notified of the allocation described in subsection (a)(2).”.

10. 2001

    Pub. L. 107–16 § 656(c)(1) · 115 Stat. 38

    1. Added · 26 U.S.C. § 4979A(a)

       Pub. L. 107–16, § 656(c)(1), added pars. (3) and (4) and, in concluding provisions

    2. Substituted · 26 U.S.C. § 4979A(a)

       Pub. L. 107–16, § 656(c)(1), 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.”

    Source evidence

    Code amendment note
    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.”

    Enacted provision · exact public law section
    (1) Application of tax.— Subsection (a) of section 4979A (relating to tax on certain prohibited allocations of employer securities) is amended— (A) by striking “or” at the end of paragraph (1), and (B) by striking all that follows paragraph (2) and inserting the following: “(3) 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 “(4) 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.".

    Effective date note
    Amendment by Pub. L. 107–16 applicable 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(a) of this title is not in effect on such date, amendment applicable to plan years ending after Mar. 14, 2001, see section 656(d) of Pub. L. 107–16, set out as a note under section 409 of this title.

11. 2001

    Pub. L. 107–16 § 656(c)(2) · 115 Stat. 38

    Amended · 26 U.S.C. § 4979A(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—

    Source evidence

    Code amendment note
    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, which made the written statement described in section 664(g)(1)(E) or in section 1042(b)(3)(B) (as the case may be).”

    Enacted provision · exact public law section
    (2) Liability.— Section 4979A(c) (defining liability for tax) is amended to read as follows: The tax imposed by this section shall be paid— “(1) in the case of an allocation referred to in paragraph (1) or (2) of subsection (a), by— “(A) the employer sponsoring such plan, or “(B) the eligible worker-owned cooperative, 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 “(2) 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.”.

    Effective date note
    Amendment by Pub. L. 107–16 applicable 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(a) of this title is not in effect on such date, amendment applicable to plan years ending after Mar. 14, 2001, see section 656(d) of Pub. L. 107–16, set out as a note under section 409 of this title.

12. 2001

    Pub. L. 107–16 § 656(c)(3) · 115 Stat. 38

    Amended · 26 U.S.C. § 4979A(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.”

    Source evidence

    Code amendment note
    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.”

    Enacted provision · exact public law section
    (3) Definitions.— Section 4979A(e) (relating to definitions) is amended to read as follows: “(e) Definitions and Special Rules.— For purposes of this section— “(1) 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. “(2) 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). “(B) 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. “(C) 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. “(D) 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— “(i) the allocation or ownership referred to in such paragraph giving rise to such tax, or “(ii) the date on which the Secretary is notified of such allocation or ownership.”.

    Effective date note
    Amendment by Pub. L. 107–16 applicable 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(a) of this title is not in effect on such date, amendment applicable to plan years ending after Mar. 14, 2001, see section 656(d) of Pub. L. 107–16, set out as a note under section 409 of this title.

15 of 15 references resolved to an enrolled provision