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(5) the procedure under the program for
determining a reasonable rate of interest;
(6) the types of collateral which may secure a
Participant loan; and
(7) the events constituting default and the steps
that will be taken to preserve plan assets.
Such Participant loan program shall be
contained in a separate written document which,
when properly executed, is hereby incorporated by
reference and made a part of the plan.
Petitioner has never filed a Form 5330, Return of Excise
Taxes, for any period relevant herein. The plan filed a Form
5500-C/R, Return/Report of Employee Benefit plan, for its plan
years ended March 31, 1991, 1992, 1993, and 1995. The plan has
not filed a Form 5500-C/R for any plan year thereafter.
The plan reported on its Form 5500-C/R for its plan year
ended March 31, 1995, that it had as of March 31, 1995, “Other”
investments of $203,241. Respondent determined that these
investments were the three loans, that each of the three loans
was a prohibited transaction under section 4975, and that the
principal of the three loans totaled $203,241 as of January 1,
1996. Respondent also determined that a “stated interest rate”
of 10 percent applied to each subject year for purposes of
computing the “amount involved” under section 4975(a) and that,
on the basis of this 10-percent rate, the amounts involved for
the subject years were as follows:
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