5 1 SEC. 6. ELIGIBILITY FOR INDUSTRIAL DEVELOPMENT 2 3 BONDS. Section 103 (b) (3) of the Internal Revenue Code of 4 1954 (relating to exempt persons) is amended by adding at 5 the end thereof the following new subparagraph: 6 7 "(C) an organization described in section 501 (c) (21).". 8 SEC. 7. EFFECTIVE DATE. 9 The amendments made by this Act, and the provisions 10 of section 2 of this Act, shall apply with respect to taxable 11 years beginning after December 31, 1978. 95TH CONGRESS 2D SESSION H.R. 13882 IN THE HOUSE OF REPRESENTATIVES AUGUST 15, 1978 Mr. WAGGONNER (for himself, and Mr. FRENZEL) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1954, and the Tax Reduction Act of 1975, with respect to employee stock ownership plans. 1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That this Act may be cited as the "Expanded Employee 4 Stock Ownership Act of 1978”. I-E 2 1 SEC. 2. CREDIT FOR ESTABLISHING EMPLOYEE STOCK OWN 3 (a) IN GENERAL.-Subpart A of part IV of subchapter 4 A of chapter 1 of the Internal Revenue Code of 1954 (relat5 ing to credits allowed) is amended by inserting after section 6 44B the following new section: 7 "SEC. 44C. EMPLOYEE STOCK OWNERSHIP PLAN CONTRIBU 8 9 TIONS. "(a) GENERAL RULE.-In the case of a corporation 10 which meets the requirements of section 416, there is al11 lowed as a credit against the tax imposed by this chapter for 12 the taxable year, an amount equal to the greater of— 13 14 15 16 17 18 19 20 "(1) not more than 2 percent of the qualified investment (as determined under subsections (c) and (d) of section 46) of the taxpayer for the taxable year, or "(2) not more than 1 percent of the aggregate participants' compensation (as defined in section 415(c)(3)) paid by the corporation during the taxable year. "(b) TRANSFER OF NEW EMPLOYER SECURITIES RE21 QUIRED. The credit allowable under subsection (a) for any 22 taxable year shall not be allowed unless, in meeting the re23 quirements of such section for such taxable year, employer 24 securities equal in value to the credit claimed are transferred 25 to the trust and at least the total amount of the credit 26 claimed under subsection (a)(1) in excess of 1 percent of the 3 1 qualified investment, or at least one-half of the credit claimed 2 under subsection (a)(2) is represented by new employer secu3 rities transferred to the trust. For purposes of this subsection, 4 the term 'new employer securities' means employer securities 5 (as defined in section 416(a)(9) not previously issued. 6 "(c) LIMITATION BASED ON TAX LIABILITY; Car 7 RYOVER OF EXCESS CREDIT. 8 9 10 11 12 13 14 15 16 17 "(1) LIMITATION.-The amount of the credit allowed under subsection (a) for the taxable year shall not exceed so much of the liability for tax for the taxable year as does not exceed $50,000, plus 95 percent of as much of the liability of the taxpayer for tax under this chapter for the taxable year as exceeds $50,000. "(2) CARRYOVER OF EXCESS CREDIT.-If the amount of the credit determined under subsection (a) for the taxable year exceeds the amount of the limita tion imposed by paragraph (1) for such taxable year (hereinafter in this paragraph referred to as the 18 19 'unused credit year'), such excess shall be— "(A) an ESOP credit carryback to each of the 3 taxable years preceding the unused credit year, and "(B) an ESOP credit carryover to each of the 7 taxable years following the unused credit year, and 1 2 3 4 5 6 7 8 9 4 subject to the limitations imposed by paragraph (1), shall be taken into account under the provisions of subsection (a) in the manner provided in that subsection. The entire amount of the unused credit for an unused credit year shall be carried to the earliest of the 10 taxable years to which (by reason of subparagraphs (A) and (B)) such credit may be carried and then to each of the other 9 taxable years to which it may be carried. "(d) LIMITATION WITH RESPECT TO CERTAIN COM10 PANIES.-In the case of a regulated public utility, no credit 11 shall be allowed by subsection (a) if the taxpayer's cost of 12 service for ratemaking purposes is reduced by reason of any 13 portion of the credit allowable by subsection (a) (determined 14 without regard to this subsection), or if the base to which the 15 taxpayer's rate of return for ratemaking purposes is applied is 16 reduced by any reason of any portion of the credit allowed by 17 subsection (a) (determined without regard to this subsec18 tion).". 19 (b) Subpart B of part I of subchapter D of chapter 1 of 20 such Code is amended by adding at the end thereof the fol21 lowing new section: 22 "SEC. 416. SPECIAL EMPLOYEE STOCK OWNERSHIP PLANS. 23 "(a) PLAN REQUIREMENTS FOR TAXPAYERS CLAIMING 24 SECTION 44C CREDIT.-In order to meet the requirements 25 of this subsection |