Instructions For Form 5330 - Internal Revenue Service (Page 5 of 12) in pdf

the future. Synthetic equity may also

Under section 409(p)(7), the

1. A Listed transaction within the

include a stock appreciation right,

Secretary of the Treasury may,

meaning of section 6707A(c)(2). Listed

phantom stock unit, or similar right to a

through regulations or other

transactions are reportable transactions

CAUTION

future cash payment based on the

guidance of general applicability,

that are the same as, or substantially

value of the stock or appreciation; and

provide that a nonallocation year occurs

similar to, any transactions that have

nonqualified deferred compensation as

in any case in which the principal

been specifically identified by the

described in Regulations section

purpose of the ownership structure of

Secretary as a tax avoidance

1.409(p)-1(f)(2)(iv). The value of a

an S corporation constitutes an

transaction for purposes of section

synthetic equity is the value of the

avoidance or evasion of section 409(p).

6011.

shares on which the synthetic equity is

For a description of situations where

2. Prohibited reportable transactions

based or the present value of the

the definition of nonallocation year was

are:

nonqualified deferred compensation.

considered, see Rev. Rul. 2004-4,

a. Any confidential transaction

2004-6 I.R.B. 414.

2. The value of any S corporation

within the meaning of Regulations

shares in an ESOP accruing during a

section 1.6011-4(b)(3); or

For section 4979A excise taxes,

nonallocation year or allocated directly

b. Any transaction with contractual

the amount entered on Part I,

or indirectly under the ESOP or any

protection within the meaning of

line 5a is 50% of the amount

other plan of the employer qualified

Regulations section 1.6011-4(b)(4).

involved in the prohibited allocations

under section 401(a) for the benefit of a

described in items 1 through 4, under

Required disclosure. Lines 13a

disqualified person. For additional

Line 5a. Section 4979A – Tax on

through 13c.

information see Regulations section

Certain Prohibited Allocations of

1.409(p)-1(b)(2).

Qualified ESOP Securities, earlier.

If you are filing an amended

3. The total value of all the

Form 5330 and you paid tax

Line 5b. Section 4965 – Prohibited

deemed-owned shares of all

with your original return and

Tax Shelter Transactions. For tax

disqualified persons.

those taxes have the same due date as

years ending after May 17, 2006, if an

those previously reported, check the

entity manager of a tax-exempt entity

A nonallocation year means a plan

box in item H and enter the tax reported

approves or otherwise causes the entity

year where the ESOP, at any time

on your original return in the entry

to be a party to a prohibited tax shelter

during the year, holds employer

space for line 13b. If you file Form 5330

transaction during the plan year and

securities in an S corporation, and

for a claim for refund or credit, show the

knows or has reason to know that the

disqualified persons own at least:

amount of overreported tax in

transaction is a prohibited tax shelter

•

50% of the number of outstanding

parentheses on line 13c. Otherwise,

transaction, then the entity manager

shares of the S corporation (including

show the amount of additional tax due

must pay the excise tax under section

deemed-owned ESOP shares), or

on line 13c and include the payment

4965(b)(2).

•

50% of the aggregate number of

with the amended Form 5330.

For purposes of section 4965, plan

outstanding shares of stock (including

Make your check or money order

entities are:

deemed-owned ESOP shares) and

•

payable to the “United States Treasury”

Qualified pension, profit-sharing, and

synthetic equity in the S corporation.

for the full amount due. Attach the

stock bonus plans described in section

payment to your return. Write your

401(a);

For purposes of determining a

•

name, identifying number, plan number,

Annuity plans described in section

nonallocation year, the attribution rules

and “Form 5330, Section ____” on your

403(a);

of section 318(a) will apply; however,

•

payment.

Annuity contracts described in

the option rule of section 318(a)(4) will

section 403(b);

not apply. Additionally, the attribution

Part II (Section 4972)

•

Qualified tuition programs described

rules defining family member is

in section 529;

modified to include the individual’s:

Tax on Nondeductible

•

Retirement plans described in

Spouse.

Employer Contributions to

•

section 457(b) maintained by a

Ancestor or lineal descendant of the

Qualified Plans

governmental employer;

individual or the individual’s spouse.

•

Individual retirement accounts within

•

Section 4972. Section 4972 imposes

A brother or sister of the individual or

the meaning of section 408(a);

an excise tax on employers who make

of the individual’s spouse and any lineal

•

Individual retirement annuities within

nondeductible contributions to their

descendant of the brother or sister.

the meaning of section 408(b);

qualified plans. The excise tax is 10%

•

Archer medical savings accounts

A spouse of an individual who is

of the nondeductible contributions in

(MSAs) within the meaning of section

legally separated from an individual

the plan as of the end of the employer’s

220(d);

under a decree of divorce or separate

tax year.

•

Coverdell education savings

maintenance is not treated as the

A qualified plan for purposes of this

accounts described in section 530; and

individual’s spouse.

•

tax means any plan qualified under

Health savings accounts within the

An individual is a disqualified person

section 401(a), any annuity plan

meaning of section 223(d).

qualified under section 403(a), and any

if:

An entity manager is the person who

•

simplified employee pension plan

The total number of shares owned by

approves or otherwise causes the entity

qualified under section 408(k) or

the person and the members of the

to be a party to a prohibited tax shelter

408(p). The term qualified plan does

person’s family (as defined in section

transaction.

not include certain governmental plans

409(p)(4)(D)) is at least 20% of the

The excise tax under section

and certain plans maintained by

deemed-owned shares (as defined in

4965(a)(2) is $20,000 for each approval

tax-exempt organizations.

section 409(p)(4)(C)) in the S

or other act causing the organization to

corporation, or

Nondeductible contributions. For

•

be a party to a prohibited tax shelter

The person owns at least 10% of the

purposes of section 4972,

transaction.

deemed-owned shares (as defined in

nondeductible contributions for the

section 409(p)(4)(C)) in the S

A prohibited tax shelter transaction

employer’s current tax year are the sum

corporation.

is:

of:

-5-

Instructions For Form 5330 - Internal Revenue Service Page 5

Related Articles

Related forms

Related Categories