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The District Court held that nonfiduciaries are not liable for
knowingly participating in a breach of fiduciary duty. Id. at
33. Petitioners' reliance on that case is misplaced because the
basis for liability of a disqualified person for the section 4975
excise tax differs from the basis for liability of a fiduciary
under ERISA section 406(a), 88 Stat. 879. See O'Malley v.
Commissioner, 96 T.C. 644, 650-651 (1991), affd. 972 F.2d 150
(7th Cir. 1992). A fiduciary is liable under ERISA section
406(a) if he or she knowingly caused the plan to engage in a
transaction described in ERISA section 406(a)(1). A fiduciary
need not participate in the transaction to be liable under ERISA
section 406(a). In contrast, a disqualified person is liable for
the section 4975(a) excise tax if he or she participates in the
transaction even if that person may have acted innocently or in
good faith or otherwise did not know or understand the nature of
the transaction. O'Malley v. Commissioner, supra at 651; Rutland
v. Commissioner, 89 T.C. 1137 (1987). We have found above at
paragraphs II-B-1 and II-B-2 that petitioner was a disqualified
person because he participated in a prohibited transaction.
3. Conclusion
We conclude that petitioner was a disqualified person under
section 4975(e)(2), and that he is liable for the 5-percent
excise tax imposed by section 4975(a).
C. Whether the Garrahan Agency Was a Disqualified Person
The Garrahan Agency is a disqualified person if it provided
services to the plan, section 4975(e)(2)(B), or if 50 percent or
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