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TITLE 26-INTERNAL REVENUE CODE quired by persons independent of the issuer; or (C) directly from the issuer, at a price not less favorable to the trust than the price paid currently for a substantial portion of the same issue by persons independent of the issuer; (2) immediately following acquisition of such obligation- (A) not more than 25 percent of the ag- gregate amount of obligations issued in such issue and outstanding at the time of acquisition is held by the trust, and (B) at least 50 percent of the aggregate amount referred to in subparagraph (A) i held by persons independent of the issuer; and (3) immediately following acquisition of the obligation, not more than 25 percent of the assets of the trust is invested in obligations of persons described in subsection (b). (f) Loans with respect to which employers are prohib- ited from pledging certain assets Subsection (b)(1) shall not apply to a loan made by a trust described in section 401(a) to the employer (or to a renewal of such a loan or, if the loan is repayable upon demand, to a con- tinuation of such a loan) if the loan bears a rea- sonable rate of interest, and if (in the case of a making or renewal)- (1) the employer is prohibited (at the time of such making or renewal) by any law of the United States or regulation thereunder from directly or indirectly pledging, as security for such a loan, a particular class or classes of his assets the value of which (at such time) rep- resents more than one-half of the value of all his assets; (2) the making or renewal, as the case may be, is approved in writing as an investment which is consistent with the exempt purposes of the trust by a trustee who is independent of the employer, and no other such trustee had previously refused to give such written approval; and (3) immediately following the making or re- newal, as the case may be, the aggregate amount loaned by the trust to the employer, without the receipt of adequate security, does not exceed 25 percent of the value of all the assets of the trust. For purposes of paragraph (2), the term "trust- ee" means, with respect to any trust for which there is more than one trustee who is indepen- dent of the employer, a majority of such inde- pendent trustees. For purposes of paragraph (3), the determination as to whether any amount loaned by the trust to the employer is loaned without the receipt of adequate security shall be made without regard to subsection (e). (Aug. 16, 1954, ch. 736, 68A Stat. 166; Sept. 2, 1958, Pub. L. 85-866, title I, § 30(a), (b), 72 Stat. 1629; July 14, 1960, Pub. L. 86-667, § 2, 74 Stat. 535; Oct. 10, 1962, Pub. L. 87-792, § 6, 76 Stat. 827; Dec. 30, 1969, Pub. L. 91-172, title I, §§ 101(j)(7)-(14), 121(b)(6)(B), 83 Stat. 527, 542; Sept. 2, 1974, Pub. L. 93-406, title II, § 2003(b), 88 Stat. 978; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1906(b)(13)(A), 90 Stat. 1834.) AMENnMENrs 1976-Subsecs. (a)(2), (c). Pub. L. 94 -455 struck out "or his delegate" following "Secretary". 1974-Subsec. (a)(1)(A). Pub. L. 93-406, § 2003(b)(1), substituted "section 501(c)(17)" for "section 501(c)(17) or (18)". Subsec. (a)(1)(B). Pub. L. 93-406, § 2003(b)(2), insert- ed "which is referred to _n section 4975(g)(2) or (3)". Subsec. (a)(2). Pub. L. 93-406, § 2003(b)(3), substitut- ed "or paragraph (1)(B)" for "or section 401". Subsec. (c). Pub, L. 93-406, § 2003(b)(4), substituted "or subsection (a)(1)(B)" for "or section 401". Subsec. (g). Pub. L. 9'.-406, § 2003(b)(5), struck out subsec. (g) which covered trusts benefiting certain owner-employees. 1969-Subsec. (a)(1)(A). Pub. L. 91-172, §§ 101J)(7), 121(b)(6)(B)(ii), redesignated former subsec. (a)(1)(B) as subsec. (a)(1)(A), and. in subsec. (a)(1)(A) as so re- designated, inserted reference to section 501(c)(18). Former subsec. (a)(1)(A). referring to organizations de- scribed in section 501(c)(3) and to prohibited transac- tions engaged in after July 1, 1950, was stricken. Subsec. (a)(1)(B). Pub. L. 91-172, § 101(j)(7), redesig- nated former subsec. (a)(1)(C) as subsec. (a)(1)(B). Former subsec. (a)(1)(B). referring to organizations de- scribed in section 501(c)(17) was amended by addition of a reference to section 501(c)(18), and redesignated as subsec. (a)(1)(A). Subsec. (a)(1)(C). Pub. L. 91-172, §§ 101(j)(7), 121(b)(6)(B)(i), added subsec. (a)(1)(C). Former subsec. (a)(1)(C), dealing with organizations described in sec- tion 401(a) and with prohibited transactions engaged In after Mar. 1, 1954, was redesignated as subsec. (a)(1)(B). Subsec. (a)(2). Pub. L. 91-172, §§ 101(j)(8), 121(b)(6)(B)(ii), removed reference to organizations described in section 501(c)(3), and added references to organizations described in section 501(c)(18). Subsec. (b). Pub. L. 91-172, § 101(J)(14), redesignated former subsec. (c) as subsec. (b). Former subsee. (b), setting out the organizations to which section applied, was stricken. Subsec. (c). Pub. L. 91-172, §§ 101(j)(9), (14), 121(b)(6)(B)(ii). redesignated former subsee, (d) as subsec. (c) and, in subsec. Cc) as so redesignated, re- moved reference to organizations described in section 501(c)(3) and added reference to organizations de- scribed in section 501(c)(17). Former subsec. c) was re- designated subsec. b). Subsec. d). Pub. L. 91-172, § 101(J)(10), (14), redesig- nated former subsec. (g) as subsec. (d), and, in subsec. d) as so redesignated, substituted "subsection b)P1) for "subsection (c)(1)." Former subsec. (d) was redesig- nated subsec. c). Subsec. (e). Pub. L. 91-172, § 101(J)(11), (14), redesig- nated former subsec. (h) as subsec. Ce), and, in subsec. (e) as so redesignated, modified section heading to read: "Special rules"; substituted "subsection (b)(1)" for "subsection (c)(1)" in material preceding par. (1) and n par. (3), and in material preceding par. (1) struck out "acquired by a trust described in section 401(a) or section 501(c)(17)". Former subsec, (e), cover- ng the disallowance of certain charitable deductions was stricken. Subsec. f). Pub. L. 91-172, § 101(J)(12), (14), redesig. nated former subsec. (i) as subsec C), and, in subsec. (f) as so redesignated, substituted "Subsection (b)(1)" for "Subsection (c)(1)", and "subsection (e)" for "sub- section (h)". Former subsec. f) defining "gift or be- quest" was stricken. Subsec. (g). Pub. L. 91-172, § 101(J)(13). (14), redesig- nated former subsec. Qi) as subsec. (g), and, in subsee. (g) as so redesignated, substituted "subsection (b)" for "subsection (c)" in par. (1). Former subsec. (g) was re- designated subsec. (d). Subsecs. (h) to (J). Pub. L. 91-172, § 101(J)(14), rede- signated former subsecs. (h), (i) and CQ) us subsecs. (e), (f) and (g). Former subsecs. (e) and (f) were stricken and former subsec. (g) was redesignated subsec. Cd). 1962-Subsec. (J). Pub. L. 87-792 added subsec. (J). Page 383 § 503