Treasury Regulations (26 C.F.R.)
26 CFR § 1.404(k)-3
Disallowance of deduction for reacquisition payments.
Q-1: Are payments to reacquire stock held by an ESOP applicable dividends that are deductible under section 404(k)(1)?
A-1: (a) Payments to reacquire stock held by an ESOP, including reacquisition payments that are used to make benefit distributions to participants or beneficiaries, are not deductible under section 404(k) because—
# (1)
Those payments do not constitute applicable dividends under section 404(k)(2); and
# (2)
The treatment of those payments as applicable dividends would constitute, in substance, an avoidance or evasion of taxation within the meaning of section 404(k)(5).
(b) See also § 1.162(k)-1 concerning the disallowance of deductions for amounts paid or incurred by a corporation in connection with the reacquisition of its stock from an ESOP.
Q-2: What is the effective date of this section?
A-2: This section applies with respect to payments to reacquire stock that are made on or after August 30, 2006.
[T.D. 9282, 71 FR 51474, Aug. 30, 2006]
Source: view the official text
In this part (40 sections)
- 1.404(a)-1 · Contributions of an employer to an employees' trust or…
- 1.404(a)-1T · Questions and answers relating to deductibility of…
- 1.404(a)-2 · Information to be furnished by employer claiming…
- 1.404(a)-3 · Contributions of an employer to or under an employees'…
- 1.404(a)-4-1.404(a)-7 · [Reserved]
- 1.404(a)-8 · Contributions of an employer under an employees' annuity…
- 1.404(a)-9 · [Reserved]
- 1.404(a)-10 · Profit-sharing plan of an affiliated group; application…
- 1.404(a)-11 · Trusts created or organized outside the United States;…
- 1.404(a)-12 · Contributions of an employer under a plan that does not…
- 1.404(a)-13 · Contributions of an employer where deductions are…
- 1.404(a)-14 · Special rules in connection with the Employee Retirement…
- 1.404(b)-1 · Method of contribution, etc., having the effect of a plan;…
- 1.404(b)-1T · Method or arrangement of contributions, etc., deferring…
- 1.404(c)-1 · Certain negotiated plans; effect of section 404(c).
- 1.404(d)-1T · Questions and answers relating to deductibility of…
- 1.404(e)-1 · [Reserved]
- 1.404(e)-1A · Contributions on behalf of a self-employed individual to…
- 1.404(g)-1 · Deduction of employer liability payments.
- 1.404(k)-1T · Questions and answers relating to the deductibility of…
- 1.404(k)-3 · Disallowance of deduction for reacquisition payments.
- 1.406-1 · Treatment of certain employees of foreign subsidiaries as…
- 1.407-1 · Treatment of certain employees of domestic subsidiaries…
- 1.408-1 · General rules.
- 1.408-2 · Individual retirement accounts.
- 1.408-3 · Individual retirement annuities.
- 1.408-4 · Treatment of distributions from individual retirement…
- 1.408-5 · Annual reports by trustees or issuers.
- 1.408-6 · Disclosure statements for individual retirement arrangements.
- 1.408-7 · Reports on distributions from individual retirement plans.
- 1.408-8 · Distribution requirements for individual retirement plans.
- 1.408-11 · Net income calculation for returned or recharacterized IRA…
- 1.408(q)-1 · Deemed IRAs in qualified employer plans.
- 1.408A-0 · Roth IRAs; table of contents.
- 1.408A-1 · Roth IRAs in general.
- 1.408A-2 · Establishing Roth IRAs.
- 1.408A-3 · Contributions to Roth IRAs.
- 1.408A-4 · Converting amounts to Roth IRAs.
- 1.408A-5 · Recharacterized contributions.
- 1.408A-6 · Distributions.