-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
(continued...)
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011