Part III. Administrative, Procedural, and Miscellaneous

26 CFR 1.1362–2: Termination of election. (Also §§ 401, 402, 409, 1361, 1362, 1366.)

.01 The terms of the ESOP require that the S corporation repurchase its stock immediately upon the ESOP’s distribution of the stock to an IRA;

.02 The S corporation actually repurchases the S corporation stock contemporaneously with, and effective on the same day as, the distribution; and

.03 No income (including tax-exempt income), loss, deduction, or credit attributable to the distributed S corporation stock under § 1366 is allocated to the participant’s IRA.