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TITLE 26-INTERNAL REVENUE CODE such time, shall be taxable under section '72 of such Code [section 72 of this title] (treating the participant or his beneficiary as having a basis of zero in the contract), "(B) no amount shall be allocated to any partici- pant in excess of the amount which might be allo- cated if the plan met the requirements of section 401 of such Code [section 401 of this title], and "(C) the plan must meet the requirements of seg. tions 410 and 415 of such Code [sections 410 and 415 of this title]. "(8)(A) Except as provided in subparagraph (B)(iii), if the amount of the credit determined under section 46(a)(2)(B) of the Internal Revenue Code of 1954 [subsec. (a)(2)(B) of this section] is re- captured or redetermined in accordance with the provisions of such Code, the amounts transferred to the plan under this subsection and subsection e) and allocated under the plan shall remain in the plan or in participant accounts, as the case may be, and continue to be allocated in accordance with the plan. "(B) If the amount of the credit determined under section 46(a)(2)(B) of the Internal Revenue Code of 1954 [subsec. (a)(2)(B) of this section] is recaptured in accordance with the provisions of such Code- "(i) the employer may reduce the amount re- quired to be transferred to the plan under para- graph (6) of this 3ubsection, or under paragraph (3) of subsection (e), for the current taxable year or any succeeding taxable years by the portion of the amount so recaptured which is attributable to the contribution to such plan, "(i) notwithstanding the provisions of para- graph (12), the employer may deduct such portion, subject to the limitations of section 404 of such Code [section 404 of this title] (relating to deduc- tions for contributions to an employees' trust or plan), or "(iii) if the requirements of subsection (f)(1) are met, the employer may withdraw from the plan an amount not in excess of such portion. "(C) If the amount of the credit claimed by an em- ployer for a prior taxable year under section 38 of the Internal Revenue Code of 1954 [section 38 of this title] is reduced because of a redetermination which becomes final during the taxable year, and the employer transferred amounts to a plan which were taken into account for purposes of this subsec- tion for that prior taxable year, then- "Ci) the employer may reduce the amount it is re- quired to transfer to the plan under paragraph (6) of this subsection, or under paragraph (3) of sub- section (e), for the taxable year or any succeeding taxable year by the portion of the amount of such reduction in the credit or increase in tax which is attributable to the contribution to such plan, or "(1i) notwithstanding the provisions of para- graph (12), the employer may deduct such portion subject to the limitations of section 404 of such Code [section 404 of this title]. "(9) For purposes of this subsection, the term- "(A) 'employer securities' means common stock issued by the employer or a corporation which is a member of a controlled group of corporations which includes the employer (within the meaning of section 1563(a) of the Internal Revenue Code 1954 [section 1563(a) of this title], determined without regard to section 1563(a)(4) and (e)(3)(C) of such Code [section 1563(a)(4) and (e)(3)(C) of this title]) with voting power and dividend rights no less favorable than the voting power and divi- dend rights of other common stock issued by the employer or such controlling corporation, or secu- rities issued by the employer or such controlling corporation, convertible into such stock, and "(B) 'value' means the average of closing prices of the employer's securities, as reported by a na- tional exchange on which securities are listed, for the 20 consecutive trading days immediately pre- ceding the date of transfer or allocation of such se- curities or, in the case of securities not listed on a national exchange, the fair market value as deter- mined in good faith and in accordance with regula- tions issued by the Secretary of the Treasury, or his delegate. "(10) The Secretary of the Treasurj or his dele- gate shall prescribe such regulations and require such reports as may be necessary to carry out the provisions of this subsection and subsections (e) and (f). "(11) If the employer fails to meet any require- ment imposed under this subsection or subsection (e) or (f) or under any obligation undertaken to comply with the requirement of this subsection or subsec- tion (e) or (f), he is liable to the United States for a civil penalty of an amount equal to the amount in- volved in such failure. The preceding sentence shall not apply if the taxpayer corrects such failure (as determined by the Secretary of the Treasury or his delegate) within 90 days after notice thereof. For purposes of this paragraph, the term 'amount in- volved' means an amount determined by the Secre- tary or his delegate, but not in excess of 1 percent of the qualified investment of the taxpayer for the tax- able year under section 46(a)(2)(B) [subsec. (a)(2)(B) of this section] and not less than the product of one- half of one percent of such amount multiplied by the number of months (or parts thereof) during which such failure continues. The amount of such penalty may be collected by the Secretary of the Treasury in the same manner in which a deficiency in the payment of Federal income tax may be col- lected "(12) Notwithstanding any provision of the Inter- nal Revenue Code of 1954 (this title] to the con- trary, no deductions shall be allowed under section 162, 212, or 404 of such Code [section 162, 212, or 404 of this title] for amounts transferred to an employee stock ownership plan and taken into account under this subsection. "(13)(A) As reimbursement for the expense of es- tablishing the plan, the employer may withhold from amounts due the plan for the taxable year for which the plan is established, or the plan may pay, so much of the amounts paid or incurred in connec- tion with the establishment of the plan as does not exceed the sum of 10 percent of the first $100,000 that the employer is required to transfer to the plan for that taxable year under paragraph (6) (including any amounts transferred under subsection (e)(3)) and 5 percent of any amount in excess of the first $100,000 of such amount. "(B) As reimbursement for the expense of adminis- tering the plan, the employer may withhold from amounts due the plan, or the plan may pay, so much of the amounts paid or incurred during the taxable year as expenses of administering the plan as does not exceed the smaller of- "(i) the sum of 10 percent of the first $100,000 and 5 percent of any amount in excess of $100,000 of the income from dividends paid to the plan with respect to stock of the employer during the plan year ending with or within the employer's taxable year, or "(ii) $100,000. "(14) The return of a contribution made by an em- ployer to an employee stock ownership plan de. signed to satisfy the requirements of this subsection or subsection (e) (or a provision for such a return) does not fail to satisfy the requirements of this sub- section, subsection (e), section 401(a) of the Internal Revenue Code of 1954 [section 401(a) of this title], or section 403(c)(1) of the Employee Retirement Income Security Act of 1974 [section 1103 of Title 29, Labor] if- "(A) the contribution is conditioned under the plan upon determination by the Secretary of the Treasury that such plan meets the applicable re- quirements of this subsection, subsection (e), or section 401(a) of such Code [section 401(a) of this title]. Page 64