Neil M. Baizer - Page 7

          Welch v. Helvering, 290 U.S. 111, 115 (1933).  Respondent                   
          determined deficiencies in petitioner's excise tax liability                
          under both subsections (a) and (b) of section 4975.                         
               Section 4975 was added to the Internal Revenue Code by title           
          II of ERISA.  ERISA sec. 2003(a), 88 Stat. 971.  Section 4975(a)            
          and (b) imposes a two-tier excise tax on prohibited transactions.           
          The policy behind the enactment of section 4975 was to tax                  
          disqualified persons who engage in self-dealing rather than                 
          innocent employees, who were previously faced with                          
          disqualification of the plan when a prohibited transaction                  
          occurred.  S. Rept. 93-383, at 94-95 (1974), 1974-3 C.B. (Supp.)            
          80, 173-174.  In this area, congressional action has been largely           
          to protect participants and their beneficiaries by ensuring that            
          the plan's assets are held for their exclusive benefit.  H.                 
          Conf. Rept. 93-1280, at 303 (1974), 1974-3 C.B. 415, 464.                   
          I. Section 4975(a)                                                          
          Section 4975(a) imposes a 5-percent tax on the "amount                      
          involved"4 with respect to the "prohibited transaction".5  It               

               4  Sec. 4975(f)(4) provides that                                       
               The term "amount involved" means, with respect to a                    
               prohibited transaction, the greater of the amount of                   
               money and the fair market value of the other property                  
               given or the amount of money and the fair market value                 
               of the other property received * * * For purposes of                   
               the preceding sentence, the fair market value--                        
                    (A) in the case of the tax imposed by subsection (a)              
                    shall be determined as of the date on which the                   

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