26 U.S. Code § 133 - Repealed.
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Section, added Pub. L. 98–369, div. A, title V, § 543(a),July 18, 1984, 98 Stat. 891; amended Pub. L. 99–514, title XI, § 1173(b)(1)(A), (2), title XVIII, § 1854(c)(2)(A), (C), (D),Oct. 22, 1986, 100 Stat. 2515, 2879; Pub. L. 100–647, title I, § 1011B(h)(1), (2),Nov. 10, 1988, 102 Stat. 3490; Pub. L. 101–239, title VII, § 7301(a)–(c), Dec. 19, 1989, 103 Stat. 2346, 2347, prior to repeal, read as follows:§ 133. Interest on certain loans used to acquire employer securities
(a) In general
Gross income does not include 50 percent of the interest received by—
(1) a bank (within the meaning of section 581),
(4) a regulated investment company (as defined in section 851), with respect to a securities acquisition loan.
(b) Securities acquisition loan
(1) In general
For purposes of this section, the term “securities acquisition loan” means—
(A) any loan to a corporation or to an employee stock ownership plan to the extent that the proceeds are used to acquire employer securities for the plan, or
(B) any loan to a corporation to the extent that, within 30 days, employer securities are transferred to the plan in an amount equal to the proceeds of such loan and such securities are allocable to accounts of plan participants within 1 year of the date of such loan. For purposes of this paragraph, the term “employer securities” has the meaning given such term by section 409 (l). The term “securities acquisition loan” shall not include a loan with a term greater than 15 years.
(2) Loans between related persons
The term “securities acquisition loan” shall not include—
(A) any loan made between corporations which are members of the same controlled group of corporations, or
(B) any loan made between an employee stock ownership plan and any person that is—
(ii) a member of a controlled group of corporations which includes such employer. For purposes of this paragraph, subparagraphs (A) and (B) shall not apply to any loan which, but for such subparagraphs, would be a securities acquisition loan if such loan was not originated by the employer of any employees who are covered by the plan or by any member of the controlled group of corporations which includes such employer, except that this section shall not apply to any interest received on such loan during such time as such loan is held by such employer (or any member of such controlled group).
(3) Terms applicable to certain securities acquisition loans
A loan to a corporation shall not fail to be treated as a securities acquisition loan merely because the proceeds of such loan are lent to an employee stock ownership plan sponsored by such corporation (or by any member of the controlled group of corporations which includes such corporation) if such loan includes—
(A) repayment terms which are substantially similar to the terms of the loan of such corporation from a lender described in subsection (a), or
(4) Controlled group of corporations
(5) Treatment of refinancings
The term “securities acquisition loan” shall include any loan which—
(A) is (or is part of a series of loans) used to refinance a loan described in subparagraph (A) or (B) of paragraph (1), and
(6) Plan must hold more than 50 percent of stock after acquisition or transfer
(A) In general
A loan shall not be treated as a securities acquisition loan for purposes of this section unless, immediately after the acquisition or transfer referred to in subparagraph (A) or (B) of paragraph (1), respectively, the employee stock ownership plan owns more than 50 percent of—
(B) Failure to retain minimum stock interest
(i) In general
Subsection (a) shall not apply to any interest received with respect to a securities acquisition loan which is allocable to any period during which the employee stock ownership plan does not own stock meeting the requirements of subparagraph (A).
To the extent provided by the Secretary, clause (i) shall not apply to any period if, within 90 days of the first date on which the failure occurred (or such longer period not in excess of 180 days as the Secretary may prescribe), the plan acquires stock which results in its meeting the requirements of subparagraph (A).
For purposes of subparagraph (A)—
(D) Aggregation rule
For purposes of determining whether the requirements of subparagraph (A) are met, an employee stock ownership plan shall be treated as owning stock in the corporation issuing the employer securities which is held by any other employee stock ownership plan which is maintained by—
(7) Voting rights of employer securities
A loan shall not be treated as a securities acquisition loan for purposes of this section unless—
(A) the employee stock ownership plan meets the requirements of section 409 (e)(2) with respect to all employer securities acquired by, or transferred to, the plan in connection with such loan (without regard to whether or not the employer has a registration-type class of securities), and
(B) no stock described in section 409 (l)(3) is acquired by, or transferred to, the plan in connection with such loan unless—
(c) Employee stock ownership plan
(d) Application with section 483 and original issue discount rules
In applying section 483 and subpart A of part V of subchapter P to any obligation to which this section applies, appropriate adjustments shall be made to the applicable Federal rate to take into account the exclusion under subsection (a).
(e) Period to which interest exclusion applies
(1) In general
In the case of—
(2) Excludable period
For purposes of this subsection, the term “excludable period” means, with respect to any original securities acquisition loan—
Effective Date of Repeal
“(1) In general.—The amendments made by this section [amending sections 291, 812, 852, 4978, 6047, and 7872 of this title and repealing this section and section 4978B of this title] shall apply to loans made after the date of the enactment of this Act [Aug. 20, 1996].
“(2) Refinancings.—The amendments made by this section shall not apply to loans made after the date of the enactment of this Act to refinance securities acquisition loans (determined without regard to section 133(b)(1)(B) of the Internal Revenue Code of 1986, as in effect on the day before the date of the enactment of this Act) [set out above] made on or before such date or to refinance loans described in this paragraph if—
“(A) the refinancing loans meet the requirements of section 133 of such Code (as so in effect),
“(B) immediately after the refinancing the principal amount of the loan resulting from the refinancing does not exceed the principal amount of the refinanced loan (immediately before the refinancing), and
“(C) the term of such refinancing loan does not extend beyond the last day of the term of the original securities acquisition loan.For purposes of this paragraph, the term ‘securities acquisition loan’ includes a loan from a corporation to an employee stock ownership plan described in section 133(b)(3) of such Code (as so in effect).
“(3) Exception.—Any loan made pursuant to a binding written contract in effect before June 10, 1996, and at all times thereafter before such loan is made, shall be treated for purposes of paragraphs (1) and (2) as a loan made on or before the date of the enactment of this Act.”
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