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from taxation under section 501(a). Sec. 72(p)(4)(A)(i)(I).
Section 72(p)(2) sets forth an exception to the general rule
of section 72(p)(1)(A). Section 72(p)(2) provides in pertinent
part:
SEC. 72. ANNUITIES; CERTAIN PROCEEDS OF ENDOWMENT AND
LIFE INSURANCE CONTRACTS.
* * * * * * *
(2) Exception for certain loans.--
(A) General rule.--Paragraph (1) [of section
72(p)] 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 during the 1-year
period ending on the day before the date
on which such loan was made, over
(II) the outstanding balance of
loans from the plan on the date on which
such loan was made, or
(ii) the greater of (I) one-half of the
present value of the nonforfeitable accrued
benefit of the employee under the plan, or
(II) $10,000.
For purposes of clause (ii), the present value of
the nonforfeitable accrued benefit shall be deter-
mined without regard to any accumulated deductible
employee contributions (as defined in subsection
(o)(5)(B)).
(B) Requirement that loan be repayable within
5 years.--
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