Brief Case
Pension Resource

Treas. Reg. § 1.404(k)-3

Disallowance of deduction for reacquisition payments.
eCFR editorial change effective 2019-03-14 · current · last amended by T.D. 9282, 71 FR 51474, Aug. 30, 2006
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Q-1: Are payments to reacquire stock held by an ESOP applicable dividends that are deductible under section 404(k)(1)?
A-1: (a) Payments to reacquire stock held by an ESOP, including reacquisition payments that are used to make benefit distributions to participants or beneficiaries, are not deductible under section 404(k) because—
(1) Those payments do not constitute applicable dividends under section 404(k)(2); and
(2) The treatment of those payments as applicable dividends would constitute, in substance, an avoidance or evasion of taxation within the meaning of section 404(k)(5).
(b) See also § 1.162(k)-1 concerning the disallowance of deductions for amounts paid or incurred by a corporation in connection with the reacquisition of its stock from an ESOP.
Q-2: What is the effective date of this section?
A-2: This section applies with respect to payments to reacquire stock that are made on or after August 30, 2006.
Source credit, amendments & notes

[T.D. 9282, 71 FR 51474, Aug. 30, 2006]

Treas. Reg. § 1.404(k)-3 — Disallowance of deduction for reacquisition payments. · eCFR editorial change effective 2019-03-14 · https://pensionresource.website/EAMain?content=EAMain.Law&id=cfr26-1.404%28k%29-3&asof=2021-09-02 · printed Oct 16, 2026
Implements
I.R.C. § 404 Deduction for contributions of an employer to an employees' trust or annuity plan and compensation under a deferred-payment plan
Glossary
ESOP
Employee stock ownership plan.
Guidance addressing this section

No documents are primarily about this section.

Also cited in 2 other documents
IRS / Treasury
Treasury Decisions
  • T.D. 9282 Sep 25, 2006 — Final regulations under sections 162(k) and 404(k) of the Code provide that a payment in redemption of employer securities held by an employee stock ownership …
Proposed Rules
  • REG-133578-05Proposed Sep 26, 2005 — Proposed regulations under section 162(k) of the Code provide guidance concerning which corporation is entitled to the deduction for applicable dividends under…
Tax Court (1) · DOL/Federal (0)
U.S. Tax Court (1)
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EffectiveThroughSourceAmended by
Apr 1, 2007currenteCFR editorial change effective 2019-03-14 run 2T.D. 9282, 71 FR 51474, Aug. 30, 2006View
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