Text: H.R.1487 — 102nd Congress (1991-1992)All Information (Except Text)

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HR 1487 IH
102d CONGRESS
1st Session
 H. R. 1487
To amend the Internal Revenue Code of 1986 to provide a limitation on the
application of the affiliated service group rules of section 414(m) of such
Code in the case of certain bona fide business transactions.
IN THE HOUSE OF REPRESENTATIVES
March 19, 1991
Mr. ROHRABACHER introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide a limitation on the
application of the affiliated service group rules of section 414(m) of such
Code in the case of certain bona fide business transactions.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. LIMITATION ON APPLICATION OF AFFILIATED SERVICE GROUP RULES.
  (a) GENERAL RULE- Section 414(m) of the Internal Revenue Code of 1986
  (relating to employees of an affiliated service group) is amended by adding
  at the end thereof the following new paragraph:
  `(7) CERTAIN ORGANIZATIONS EXCEPTED- For purposes of applying the employee
  benefit requirements listed in paragraph (4) for any year to any employee
  benefit plan maintained by an organization which is a member of an
  affiliated service group (as defined in paragraph (2)) and not maintained
  by any other member of such affiliated service group during such year,
  paragraph (1) shall not apply, if--
  `(A) the principal purpose of such organization in entering into or
  maintaining in such year the service arrangement described in paragraph
  (2) that causes such organization to be a member of such affiliated
  service group is other than the avoidance of any of the employee benefit
  requirements listed in paragraph (4) and the Secretary does not establish
  that a substantial purpose of such organization in entering into or
  maintaining in such a year such service arrangement is the avoidance of
  any of the employee benefit requirements listed in paragraph (4);
  `(B) more than 50 percent of the service revenues and total revenues of
  such organization for such year are derived from activities other than the
  services performed by such organization pursuant to the service arrangement
  described in paragraph (2) that causes such organization to be a member
  of such affiliated service group; and
  `(C) more than 50 percent of the total hours of service (as defined
  in section 410(a)(3)(C)) worked by the employees of such organization
  (determined without regard to the application of this subsection) for such
  organization during such year are worked in the course of activities other
  than the services performed by such organization pursuant to the service
  arrangement described in paragraph (2) that causes such organization to
  be a member of such affiliated service group.
An organization that satisfies the requirements of subparagraphs (A), (B), and
(C) of this paragraph for any year shall not be treated for such year as an
organization described in paragraph (2) of this subsection with respect to any
other organization described in paragraph (2) of this subsection that satisfies
the requirements of subparagraph (A) of this paragraph for such year.'
  (b) EFFECTIVE DATES-
  (1) IN GENERAL- Except as provided in paragraph (2), the amendment made
  by this section shall apply to plan years ending after November 30, 1980.
  (2) PLANS IN EXISTENCE ON NOVEMBER 30, 1980- In the case of a plan in
  existence on November 30, 1980, the amendment made by this section shall
  apply to plan years beginning after November 30, 1980.

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