26 USC 4978 - Tax on certain dispositions by employee stock ownership plans and certain cooperatives
(a) Tax on dispositions of securities to which section 1042 applies before close of minimum holding period
If, during the 3-year period after the date on which the employee stock ownership plan or eligible worker-owned cooperative acquired any qualified securities in a sale to which section 1042 applied or acquired any qualified employer securities in a qualified gratuitous transfer to which section 664 (g) applied, such plan or cooperative disposes of any qualified securities and
If, during the 3-year period after the date on which the employee stock ownership plan or eligible worker-owned cooperative acquired any qualified securities in a sale to which section 1042 applied or acquired any qualified employer securities in a qualified gratuitous transfer to which section 664 (g) applied, such plan or cooperative disposes of any qualified securities and
(1) the total number of shares held by such plan or cooperative after such disposition is less than the total number of employer securities held immediately after such sale, or
(2) except to the extent provided in regulations, the value of qualified securities held by such plan or cooperative after such disposition is less than 30 percent of the total value of all employer securities as of such disposition (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),
there is hereby imposed a tax on the disposition equal to the amount determined under subsection (b).
(b) Amount of tax
(1) In general
The amount of the tax imposed by subsection (a) shall be equal to 10 percent of the amount realized on the disposition.
The amount of the tax imposed by subsection (a) shall be equal to 10 percent of the amount realized on the disposition.
(2) Limitation
The amount realized taken into account under paragraph (1) shall not exceed that portion allocable to qualified securities acquired in the sale to which section 1042 applied or acquired in the qualified gratuitous transfer to which section 664 (g) applied determined as if such securities were disposed of
The amount realized taken into account under paragraph (1) shall not exceed that portion allocable to qualified securities acquired in the sale to which section 1042 applied or acquired in the qualified gratuitous transfer to which section 664 (g) applied determined as if such securities were disposed of
(A) first from qualified securities to which section 1042 applied or to which section 664 (g) applied acquired during the 3-year period ending on the date of the disposition, beginning with the securities first so acquired, and
(B) then from any other employer securities.
If subsection (d) applies to a disposition, the disposition shall be treated as made from employer securities in the opposite order of the preceding sentence.
(3) Distributions to employees
The amount realized on any distribution to an employee for less than fair market value shall be determined as if the qualified security had been sold to the employee at fair market value.
The amount realized on any distribution to an employee for less than fair market value shall be determined as if the qualified security had been sold to the employee at fair market value.
(c) Liability for payment of taxes
The tax imposed by this subsection shall be paid by
The tax imposed by this subsection shall be paid by
(1) the employer, or
(2) the eligible worker-owned cooperative,
that made the written statement described in section 664 (g)(1)(E) or in section 1042 (b)(3) (as the case may be).
(d) Section not to apply to certain dispositions
(1) Certain distributions to employees
This section shall not apply with respect to any distribution of qualified securities (or sale of such securities) which is made by reason of
This section shall not apply with respect to any distribution of qualified securities (or sale of such securities) which is made by reason of
(A) the death of the employee,
(B) the retirement of the employee after the employee has attained 591/2 years of age,
(2) Certain reorganizations
In the case of any exchange of qualified securities in any reorganization described in section 368 (a)(1) for stock of another corporation, such exchange shall not be treated as a disposition for purposes of this section.
In the case of any exchange of qualified securities in any reorganization described in section 368 (a)(1) for stock of another corporation, such exchange shall not be treated as a disposition for purposes of this section.
(3) Liquidation of corporation into cooperative
In the case of any exchange of qualified securities pursuant to the liquidation of the corporation issuing qualified securities into the eligible worker-owned cooperative in a transaction which meets the requirements of section 332 (determined by substituting 100 percent for 80 percent each place it appears in section 332 (b)(1)), such exchange shall not be treated as a disposition for purposes of this section.
In the case of any exchange of qualified securities pursuant to the liquidation of the corporation issuing qualified securities into the eligible worker-owned cooperative in a transaction which meets the requirements of section 332 (determined by substituting 100 percent for 80 percent each place it appears in section 332 (b)(1)), such exchange shall not be treated as a disposition for purposes of this section.
(e) Definitions and special rules
For purposes of this section
For purposes of this section
(1) Employee stock ownership plan
The term employee stock ownership plan has the meaning given to such term by section 4975 (e)(7).
The term employee stock ownership plan has the meaning given to such term by section 4975 (e)(7).
(2) Qualified securities
The term qualified securities has the meaning given to such term by section 1042 (c)(1); 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)).
The term qualified securities has the meaning given to such term by section 1042 (c)(1); 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)).
(3) Eligible worker-owned cooperative
The term eligible worker-owned cooperative has the meaning given to such term by section 1042 (c)(2).
The term eligible worker-owned cooperative has the meaning given to such term by section 1042 (c)(2).
(4) Disposition
The term disposition includes any distribution.
The term disposition includes any distribution.