This memorandum, issued February 23, 2010, discusses various qualification issues presented by plan provisions concerning the mandatory transfer of employer securities into and out of participant plan accounts.

This memorandum, issued December 9, 2009, discusses the required timing and substance of amendments intended to comply with Code section 409(p).

This memorandum, issued November 3, 2009, discusses plan language which defines “qualified participant” as set forth in Code section 401(a)(28)(B)(iii).

This memorandum, issued November 3, 2009, concludes that provisions in certain employee stock ownership plans which provide that a distribution of stock is subject to immediate, mandatory resale are consistent with Code section 409(h).

EP Examination Guidelines - Employee Stock Ownership Plans (ESOPs) published April, 2006

The Employee Plans Examination Guidelines provide guidance on specific technical topics of particular interest relating to qualified retirement plans. These guidelines are for reference and use by Employee Plans personnel.

Because of the diversity of conditions encountered during examinations, these guidelines are not devised to be all inclusive or restrictive. They are used as a guide and a reference by all Employee Plans examiners. Consequently, the techniques identified may be modified based on the actual examination issues encountered.

Given the purpose of these guidelines, they cannot be, nor are they intended to be, a precedential or comprehensive statement of the Service's legal position on the issues covered herein. They are not to be relied upon or cited as authority. These guidelines are being issued for the sole purpose of assisting the examiner in performing an examination of certain issues for which it was believed guidelines would be helpful. It is not expected that each issue in these guidelines will be relevant in every examination.

Copy of the powerpoint used by IRS speakers in the June 24, 2010 Phone Forum. The IRS has indicated that a transcript and video of the forum will be made available - but it is not yet posted to the IRS website. We will make a copy or link available when it is posted.

Section 108 Reduction of Tax Attributes for S Corporations

final regulations that provide guidance on the manner in which an S corporation reduces its tax attributes
under section 108(b) for taxable years in which the S corporation has discharge of indebtedness income that is excluded from gross income under section 108(a). In particular, the regulations address situations in which the aggregate amount of the shareholders' disallowed section
1366(d) losses and deductions that are treated as a net operating loss tax attribute of the S corporation exceeds the amount of the S corporation's excluded discharge of indebtedness income. The regulations affect S corporations and their shareholders.

The IRS preamble to the final regulations confirms that disallowed losses and deductions under section 1366(d)(1) of a shareholder that is an employee stock ownership plan (ESOP) are included in the S corporation’s deemed NOL. The IRS stated position is that Section 108(d)(7)(B) provides that any loss or deduction that is disallowed for the taxable year of the discharge under section 1366(d)(1) is treated as a deemed NOL of the S corporation. Accordingly, section 108(d)(7)(B) applies to any shareholder, including an ESOP shareholder, that has disallowed losses and deductions for the taxable year of the discharge under section 1366(d)(1).

H.R.3586
Title: To amend the Internal Revenue Code of 1986 to expand the availability of employee stock ownership plans in S corporations, and for other purposes.
Sponsor: Rep Kind, Ron [WI-3] (introduced 9/16/2009) Cosponsors (11)
Latest Major Action: 11/16/2009 Referred to House subcommittee. Status: Referred to the Subcommittee on Health, Employment, Labor, and Pensions.

This notice contains the 2009 Cumulative List of Changes in Plan Qualification
Requirements (2009 Cumulative List) described in section 4 of Rev. Proc. 2007-
44, 2007-2 C.B. 54. The 2009 Cumulative List is to be used primarily by plan
sponsors of individually designed plans that are in Cycle E. An individually
designed plan is in Cycle E if it is a single employer plan where the last digit of
the employer identification number of the plan sponsor is 5 or 0, or it is a § 414(d)
governmental plan for which an election has been made by the plan sponsor to
treat Cycle E as the initial EGTRRA remedial amendment cycle for the plan.
The list of changes in section VI of this notice does not extend the deadline by
which a plan must be amended to comply with any statutory, regulatory, or
guidance changes. The general deadline for timely adoption of an interim or
discretionary amendment can be found in section 5.05 of Rev. Proc. 2007-44.

This notice extends the deadline for amending qualified retirement plans to meet certain
requirements of the Internal Revenue Code that were added by the Pension Protection
Act of 2006 (PPA ’06), Pub. L. 109-280, and subsequently modified by the Worker,
Retiree, and Employer Recovery Act of 2008 (WRERA), Pub. L. 110-458. The deadline
is extended to the last day of the first plan year that begins on or after January 1, 2010.