EXCISE TAX ON PLANS OR COOPERATIVES DISPOSING OF EMPLOYER SECURITIES FOR WHICH ESTATE TAX DEDUCTION WAS ALLOWED.

SEC. 10413. EXCISE TAX ON PLANS OR COOPERATIVES DISPOSING OF EMPLOYER SECURITIES FOR WHICH ESTATE TAX DEDUCTION WAS ALLOWED. (a) In General.— Chapter 43 (relating to excise taxes on qualified pension, etc., plans) is amended by inserting after section 4978 the following new section: “SEC. 4978A. TAX ON CERTAIN DISPOSITIONS OF EMPLOYER SECURITIES TO WHICH SECTION 2057 APPLIED. “(a) Imposition of Tax.— In the case of a taxable event involving qualified employer securities held by an employee stock ownership plan or eligible worker-owned cooperative, there is hereby imposed a tax 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 30 percent of— “(A) the amount realized on the disposition in the case of a taxable event described in paragraph (1) or (2) of subsection (c), or “(B) the amount repaid on the loan in the case of a taxable event described in paragraph (3) of subsection (c). “(2) Dispositions other than sales or exchanges.— For purposes of paragraph (1), in the case of a disposition of employer securities which is not a sale or exchange, the amount realized on such disposition shall be the fair market value of such employer securities at the time of disposition. “(c) Taxable Event.— For purposes of this section, the term ‘taxable event’ means the following: “(1) Disposition within 3 years of acquisition.— Any disposition of employer securities by an employee stock ownership plan or eligible worker-owned cooperative within 3 years after such plan or cooperative acquired qualified employer securities. 101 STAT. 1330–437 “(2) Stocks disposed of before allocation.— Any disposition of qualified employer securities to which paragraph (1) does not apply if— “(A) such disposition occurs before such securities are allocated to accounts of participants or their beneficiaries, and “(B) the proceeds from such disposition are not so allocated. “(3) Use of assets to repay acquisition loans.— The payment by an employee stock ownership plan of any portion of any loan used to acquire employer securities from transferred assets (within the meaning of section 2057(c)(2)(B)). “(d) Ordering Rules.— For purposes of this section and section 4978, any disposition of employer securities shall be treated as having been made in the following order: “(1) First, from qualified employer securities acquired during the 3-year period ending on the date of such disposition, beginning with the securities first so acquired. “(2) Second, from qualified employer securities acquired before such 3-year period unless such securities (or the proceeds from such disposition) have been allocated to accounts of participants or their beneficiaries. “(3) Third, from qualified securities (within the meaning of section 4978(e)(2)) to which section 1042 applied acquired during the 3-year period ending on the date of such disposition, beginning with the securities first so acquired. “(4) Finally, from any other employer securities. In the case of a disposition to which section 4978(d) or subsection (e) applies, the disposition of employer securities shall be treated as having been made in the opposite order of the preceding sentence. “(e) Section Not To Apply to Certain Dispositions.— “(1) In general.— This section shall not apply to any disposition described in paragraph (1) or (3) of section 4978(d). “(2) Certain reorganizations.— For purposes of this section, any exchange of qualified employer securities for employer securities of another corporation in any reorganization described in section 368(a)(1) shall not be treated as a disposition, but the employer securities which were received shall be treated— “(A) as qualified employer securities of the plan or cooperative, and “(B) as having been held by the plan or cooperative during the period the qualified employer securities were held. “(3) Disposition to meet diversification requirements.— Any disposition which is made to meet the requirements of section 401(a)(28) shall not be treated as a disposition. “(f) Definitions and Special Rules.— For purposes of this section— “(1) Terms used in section 2057.— Any term used in this section which is used in section 2057 shall have the meaning given such term by section 2057. “(2) Qualified employer securities.— The term ‘qualified employer securities’ has the meaning given such term by section 101 STAT. 1330–4382057, except that such term shall include employer securities sold before February 27, 1987, for which a deduction was allowed under section 2057. “(3) Disposition.— The term ‘disposition’ includes any distribution. “(4) Liability for payment of taxes.— The tax imposed by this section shall be paid by— “(A) the employer, or “(B) the eligible worker-owned cooperative, which made the written statement described in section 2057(e).” (b) Conforming Amendments.— (1) Section 4978(b)(2) is amended by striking out the parenthetical and inserting in lieu thereof “(determined as if such securities were disposed of in the order described in section 4978A(e))”. (2) The table of sections for chapter 43 is amended by inserting after the item relating to section 4978 the following new item: “Sec. 4978A. Tax on certain dispositions of employer securities to which section 2057 applied.” (c) Effective Date.— The amendments made by this section shall apply to taxable events (within the meaning of section 4978A(c) of the Internal Revenue Code of 1986) occurring after February 26, 1987.