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I. Issues 1-4. Loans
The questions presented in the first four issues are related
to the corporate and plan loans, and we discuss them
correlatively. Distributions from a qualified plan are taxable
as provided in section 402(a). The Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA), Pub. L. 97-248, sec. 236(a),
96 Stat. 324, 509, added section 72(p). Section 72(p)(1)(A)
generally treats loans from a qualified employer plan to plan
participants or beneficiaries as taxable distributions. Section
72(p)(1)(A) provides: "If during any taxable year a participant
or beneficiary receives (directly or indirectly) any amount as a
loan from a qualified employer plan, such amount shall be treated
as having been received by such individual as a distribution
under such plan."4 Section 72(p)(2)5 provides an exception to
4Sec. 72(p)(1)(A) applies to any loan from a qualified
employer plan which was made after Aug. 13, 1982. Tax Equity and
Fiscal Responsibility Act of 1982 (TEFRA), Pub. L. 97-248, sec.
236(a), 96 Stat. 324, 510-511.
5Sec. 72(p)(2) provides in pertinent part:
(2) Exception for Certain Loans.--
(A) General Rule.--Paragraph (1) shall not apply
to any loan to the extent that such loan (when added to
the outstanding balance of all other loans from such
plan whether made on, before or after August 13, 1982),
does not exceed the lesser of--
(i) $50,000, reduced by the excess (if any) of--
(I) the highest outstanding
balance of loans from the plan
(continued...)
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