Qualifying as a separate line of business for nondiscrimination pension plan rules

Ray A. Knight

The IRS recently issued final regulations for determining whether or not an employer can be treated like a SLOB (T.D. 8376, December 2, 1991). As negative as the acronym -- "SLOB -- may sound, many employers are striving to be regarded by the IRS as operating as "qualified SLOBs," or qualified separate lines of business.

The SLOB regulations are critical for purposes of testing minimum coverage and participation requirements for qualified retirement plans under sections 410(b) and 401(a)(26) of the Internal Revenue Code, respectively. In general, sections 410(b) and 401(a)(26) require employers to compare participation by, and the level of benefits provided to, highly compensated employees with that of nonhighly compensated employees on an employer-wide basis. If the SLOB criteria are met, however, these tests are applied separately to each of the employer's qualified separate lines of business instead of to the employer as a single entity.

Under the final regulations, the employer is allowed to exercise its discretion in determining the separation of its lines of business. Additionally, the employer is provideed with greater freedom to compete effectively with similar industries in the areas of employee compensation without the danger of discrimination against a group of employees who are employed in a separate division of the employer's operations. Finally, the constraints placed upon the employer to qualify for SLOB treatment are more objective than previous requirements under section 414(r) because the regulations contain more definitive and numerical guidelines.

This article discusses the general criteria established by the IRS in the final section 414(r) regulations, illustrates the application of some of the criteria to an employer's organization to establish qualification under the SLOB rules, and reviews the advantages and disadvantages that an employer faces with the promulgation of these provisions.

I. SECTION 414(r): SPECIAL RULES FOR

SEPARATE LINES OF BUSINESS

Section 414(r) provides guidance regarding special rules for qualifying for separate line of business treatment. Generally, the employer must have "bona fide business reasons" for operating these separate lines of business. (1) (*) All property and services provided by the employer to its customers must be available exclusively through the lines of business with no remainder of the employer's operations existing outside of the separate lines. (2)

III. GUIDANCE PROVIDED BY TREAS.

REG. [section] 1.414(r)

In order to meet the standard established by section 414(r), an employer must meet the specific requirements contained in Treas. [subsection] 1.414(r)-1 through 1.414(r)-11, as well as rules provided under sections 410(b), 401(a)(26), and 129(d)(8). (3) The regulations apply to plan years and testing years beginning on or after January 1, 1992. (4) For plan years beginning before this date but after 1986 (when section 414(r) was enacted), an employer qualifies as operating separate lines of business if the employer "reasonably determines" that it meets the requirements of section 414(r) (other than the requirements of administrative scrutiny under section 414(r)(2)(C)), or complies with the terms of the regulations under that section (with the same exception of the administrative scrutiny requirement). (5)

In general, the tests presented in Treas. Reg. [section] 1.414(r) for the satisfaction of these requirements are three-tiered:

(1) The employer must designate its lines of business.

(2) The employer must prove the organizational and operational independence of each line of business.

(3) The employer must meet three statutory requirements:

(a) each line of business must employ at least 50 employees;

(b) the employer must notify the Secretary of the Treasury of its intentions for operations under separate lines of business; and

(c) each line must survive administrative scrutiny, which includes six safe harbor rules, or the employer must obtain an individual determination from the IRS Commissioner.

A flowchart of these major provisions is provided in the regulations. (See Table 1 on page 123.)

III. TEST 1: DESIGNATING SEPARATE

LINES OF BUSINESS

The first test of separateness of business lines provides the employer with more breadth and flexibility than any of the others. It is a more subjective process, because it contains no specific numeric or other restrictive requirements. In a two-step process, the employer designates its lines of business by first identifying all of the services and property it provides to customers during the testing year and then determining what portion of the property and services is provided by each line of business. (6) The "testing year" referred to in the regulation is the calendar year. (7)

A. Identification of Property and

Services Provided to Customers

The provisions relating to the identification of all property and services provided to customers are relatively straightforward. Property provided to customers may be real or personal, tangible or intangible, and it is provided during the testing year in one or more transactions representing a sale, lease, license, loan, exchange, or other consideration. (8) Services are considered to be provided to customers if during the testing year the services are rendered by the employer to or on behalf of the customer for consideration. (9) The property and services must be provided to persons acting in the capacity of customers (other than the employer) in the ordinary course of business. (10) The provisions of this step can be viewed as a reinforcement of the definition of "bona fide business reasons" for operating separate lines of business.

B. Assigning Property

and Services to

Lines of Business

After all products and services provided by the employer to customers are identified, the employer may apportion these products and services among its lines of business in a manner of its discretion. The regulations allow the employer much freedom of organization and operation in determining its lines of business, and the employer is not bound in any testing year by the manner in which it designated its lines of business in any previous year. (11) In addition, the employer is not required to combine similar business activities in the same designated line, nor is it required to separate dissimilar products or services. Furthermore, the employer is not forced to segregate products from services as separate lines. (12) Therefore, the same products and services could be offered by more than one line of business.

The flexibility of the regulations is quite favorable, since the employer is able to determine its lines of business in a fashion best suited for the company's future operational structure. For example, geographical locations may be the best manner for a particular company to delineate its activities. Employee compensation (including benefits) generally varies among different geographical regions, and the ability of an employer to separate its lines of business according to location without the danger of discrimination in its retirement programs will likely enhance an employer's ability to compete in difference markets. Other grouping distinctions that could be made include wholesale or retail operations, different transaction types such as sales or leases, and different customer bases such as governmental or private.

The single restriction placed upon an employer's chosen method of designating its different lines of business is a test of reasonableness. (13) The regulations provide examples of unreasonableness, such as an employer's delineating separate lines of business for products and services that are not offered separately to customers. Similarly, the segregation of business lines would be unreasonable if the provision of the separate products or services are ancillary or incidental to one another or are regularly associated with one another. (14)

IV. TEST 2: PROVING "SEPARATENESS" OF

ESTABLISHED LINES OF BUSINESS

The second test provides guidance on determining the organizational and operational independence of individual lines of business from the remainder of the employer's organization. Four specific criteria for determining this independence are developed in the regulations.

A. Rule 1 - Separate

Organizational Unit

Each line of business must prove its formal organizational individuality (i.e., separate organizational unit or group of separate organizational units) within the employer. (15) This objective could be accomplished by the line's legal form, such as a corporation or a partnership that is still controlled by the employer. The same objective could be accomplished with a non-legal distinction between the lines of business, such as separate divisions of the employer. Regardless of the manner in which it is satisfied, the requirement of an absolute separate organization must be met during every day of the testing year. (16)

B. Rule 2 - Separate Financial Accountability

The separateness of a line of business is also manifested by those lines of business that operate as individual profit centers (i.e., separate profit center or group of separate profit centers). The individual line must exhibit its separateness by maintaining its own accounting records reflecting its profitability for the employer's internal purposes such as planning and control. (17) Independent financial and accounting records provide strong evidence of the separateness of a line of business from the remainder of the employer's operations. The regulations thus mandate that separate accounting records be maintained for each line within an employer for every day of the testing year. (18)

C. Rule 3 - Separate Employee Workforce

The third rule is one of the few provisions of the section 414(r) regulations that quantifies its requirements, thereby giving employers more concrete and objective guidance than those provisions allowing the employer to utilize its own subjective judgment. This rule mandates that a SLOB have its own employee workforce, which is accomplished only if a minimum of 90 percent of its employees provide substantial services to that particular line of business. (19)

The regulations narrow the application of the third separateness criteria by requiring a determination of the percentage of the employee workforce that provides services exclusively to one particular line of business. This is determined by a fraction, the numerator of which is the number of employees providing substantial services to that line and the denominator of which is the number of all employees providing any services to that line. (20) An employee is deemed to be providing substantial services to one particular line of business if at least 75 percent of his services are devoted specifically to that line. (21)

For purposes of determining the employees to be included in the fraction for compliance with the 90-percent workforce criteria, all employees who are employed on the first testing day are considered. (22) Treas. Reg. [section] 1.414(r)-11(b)(7) defines the "first testing day as the earliest day in the testing year on which any plan of the employer is required to satisfy section 410(b). An exception to the all-employee rule for determining the workforce is the exclusion of certain nonresident aliens. (23) Furthermore, when evaluating the services provided by a particular employee, only those efforts performed to provide property or services to customers of the employer during the testing year are applicable. (24) The following example of the application of the rules for separateness of the workforce of a SLOB is provided in Treas. Reg. [section] 1.414(r)-3(c)(vi).

Example. Employer A operates three lines of business as determined under Treas. Reg. [section] 1.414(r)-2. One of Employer A's lines of business manufactures and sells tires and other automotive products. Employee M is a tire press operator in Employer A's tire factory. Employee N is the manager of the tire factory. Under these facts, the services of Employees M and N contribute to providing tires to customers of Employer A. Both employees therefore provide services to Employer A's tire and automotive products line of business within the meaning of Treas. Reg. [section] 1.414(r)-3(c)(5).

D. Rule 4 - Separate Management

Like Rule 3, this provision relates to the composition of the employees of the individual lines of business, but it refers specifically to the management of the business line. A line of business is deemed to have its own separate management if at least 80 percent of the top-paid employees provide their services exclusively to that line. (25)

Again, the regulations provide specific guidance on the calculation of the percentage of separate management. The percentage represents the number of top-raid employees who devote substantial services to the line of business in relation to all top-paid employees who provide any services to the line of business. (26) Top-paid employees are defined as those who are among the highest 10 percent of all employees providing services to the employer ranked by compensation paid by the employer. (27) An example of the application of the separate management criteria follows.

Example. Employer C operates three lines of business as determined under Treas. Reg. [section] 1.414(r)-2. One of its lines of business is the operation of a chain of athletic equipment and apparel stores. Of Employer C's total workforce, 10,500 employees provide more than a negligible amount of the services they provide to Employer C to the athletic equipment and apparel stores lines of business, and 10,000 of these employees provide at least 25 percent of their services to the athletic equipment and apparel stores lines of business, within the meaning of Treas. Reg. [section] 1.414(r)-3(c)(5). Of the 1,000 employees who constitute the top 10 percent by compensation of these 10,000 employees, 930 are substantial-service employees with respect to that line of business. Because 930 is 93 percent of 1,000, at least 80 percent of the top-paid employees provide their exclusive services with respect to that line of business. Employer C's athletic equipment and apparel stores line of business, therefore, has its own separate management and thus satisfies the requirement of Treas. Reg. [section] 1.414(r)-3(b)(5).

Thus, if a specific line of business employs 50 people, the top-paid employees to be examined in the separate management test would be the five employees (50 X 10% = 5) who are the highest compensated in the line of business. To pass the 80-percent test, four of five top-paid employees (5 X 80% = 4) must provide services exclusively to that line of business.

One purpose of the 80-percent test is very clear: to prevent abuse in the compensation of top-paid employees. The separateness and independence of a line of business may be questionable if a large percentage of its top-paid employees were also providing substantial services to another liner of business within the employer. Depending on the nature of the line of business, these top-paid employees may not be providing services commensurate with the compensation they receive from the line of business.

Despite the clear intent of this rule, it may not prove what it was established to prove. The underlying purpose of the separate management requirement is to establish the independence of the line of business in its operation, including its decision-making processes and other managerial functions. This premise, however, is not necessarily proven based on a mathematical calculation of 80 percent of the top-paid employees, since it presumes that the top-paid employees are management. Obviously, this is not always the case in some industries -- particularly in those businesses that compensate employees on a commission basis. The separate management requirement should also involve analysis of the actual duties of the top-paid employees to determine which employees are actually managerial personnel.

V. TEST 3: STATUTORY REQUIREMENTS

The third major test of a line of business to be deemed a qualified SLOB consists of three statutory requirements. An employer must satisfy these criteria: (1) a 50-employee requirement, (2) a notice requirement, and (3) an administrative scrutiny requirement. (28)

A. Fifty-Employee Requirement

The first statutory requirement is very simple. A SLOB must employ a minimum of 50 persons who devote their services exclusively to the line of business on each day of the testing year. (29) All employees, including collectively bargained employees, are taken into account for this requirement with the exception of certain short-term, seasonal, and part-time employees. (30) This requirement alone will hinder many employers from obtaining status as operating qualified SLOBs, since their employee populations will not meet the 50-person threshold. Similarly, employers making the best use of their employees and other resources across several lines of business to avoid duplication of efforts will be penalized.

B. Notice Requirement

The notice requirement is satisfied for a SLOB if the employer, in a timely manner as determined by the regulations, notifies the Secretary of the Treasury that it considers itself as operating qualified separate lines of business for that testing year. (31) No specific instruction, however, is provided on the manner in which to provide this notice to the IRS. Moreover, Notice 90-57, 1990-2 C.B. 344, provides that no notice is required until such specific guidance is provided. (32)

The regulations under section 414(r) do, however, state the probable requirements of the notice. The notice must specify each line of business operated by the employer as well as the Code sections that are to be applied separately with regard to the employees of each SLOB. (33) Once this notice has been given, the emplyer is considered to have made this election irrevocably for all plan years that begin in the testing year. (34)

C. Administrative Scrutiny

The third statutory rule is more complex than the first two. It involves compliance with an administrative scrutiny requirement of either the statutory safe-harbor test or one of five administrative safe harbors. In the event an employer is unable to meet any of these administrative scrutiny tests, individual determinations may be sought from the IRS.

1. Statutory Safe-Harbor Test. The statutory safe-harbor test is satisfied for SLOB only if the ratio of the percentage of highly compensated employees (HCEs) of the SLOB to the percentage of HCEs to employees employer-wide is: [35]

(a) at least 50 percent, and

(b) no more than 200 percent.

A "ten-percent" exception to the above rule eixsts. Hence, the rquirement of a 50-percent iminum is considered satisfied if at least 10 percent of all HCEs of the employer provide services exclusively to the SLOB under the criteria of exclusiveness discussed previously. [36]

Another exception exists in the case of a SLOB that satisfied this statutory safe-harbor test in the testing year immediately preceding the current testing year. This satisfies the statutory safe-harbor test for the current testing year, but only if the employer designates the same line of business in the immediately preceding testing year as in the current testing year, and either. [37]

(1) the HCE percentage ratio of the SLOB does not deviate more than 10 percent between the current testing year and the immediately preceding testing year, or

(2) at least 95 percent of the employees of the SLOB in the current testing year were employees of the SLOB in the immediately preceding testing year.

2. Alternate Safe Harbor I -- SLOBs in Different Industries. To satisfy this safe harbor, the separate line of business must simply operate within a different industry or industries from those of the employer's other lines of business. [38] This is accomplished only if both of the following stipulations are met:

(1) the property or services provided to customers by the SLOB falls within one or more of the industry classifications established by the IRS, [39] and

(2) none of the property or services provided to customers by any other line of business of the employer falls within the same category or categories. [40]

Treas. Reg. [section] 1.414(r)-5(c)(3) states that the Commissioner will provide, through the issuance of a revenue procedure or other means, industry categories by which employers may determine the classification of their separate lines of business. Concurrently with the issuance of the final regulations, Rev. Proc. 91-64, 1991-50 I.R.B. (Dec. 16, 1991), provides a listing of industry categories derived from the Standard Industrial Classification codes (the "SIC" codes) in the Standard Industrial Classification Manual (1987). These codes are expected to be modified based on the experience of taxpayers and the IRS to reflect better the varying environments or diverse industries. An employer may disregard foreign operations in determining whether a separate line of business is in a different industry (or industries) from every other separate line of business of the employer. [41]

3. Alternate Safe Harbor II -- Segments under FAS 14. An employer will meet the requirements of this safe harbor if during its testing year it is required under Statement of Financial Accounting Standards Number 14 (FAS 14) to report the operations of its line of business as a separate segment or segments to the Securities and Exchange Commission in an annual report (either Form 10-K (42) or Form 20-F (43)). The SLOB must provide property and serivces to customers of the employer that are identical to the property and services provided to customers by the industry segment(s) reportable under FAS 14. (44) Furthermore, the Form 10-K or Form 20-F must be timely filed with the SEC (90 days or six months, respectively, after the close of the employer's fiscal year which includes as 15-day extension of filing time). (45)

4. Alternate Safe Harbor III -- Merger and Acquisition Safe Harbor. For a four-year period beginning with the first testing year,(46) a separate line of business acquired through certain mergers and acquisitions will generally meet a safe harbor if:

(1) the employer designates the acquired business as a line of business,

(2) the line of business is a separate line of business, and

(3) there are no significant changes in the workforce of the acquired separate line of business. (47)

5. Alternate Safe Harbor IV -- Average Benefits. If the HCE percentage ratio for a separate line of business is less than 50 percent, this safe harbor is met if the actual benefit percentage of the nonhighly compensated employees of the separage line of business is at least equal to the actual benefit percentage of all the employer's other nonhighly compensated employees. (48) Alternatively, if the HCE ratio for a line of business is greater than 200 percent, this safe harbor is met if the actual benefits percentage of the HCEs of the separate line of business does not exceed the actual benefits percentage of all the employer's other HCEs. (49)

6. Alternate Safe Harbor V -- Minimum or Maximum Benefits. This safe harbor provision measures minimum benefits provided to nonhighly compensated employees and maximum benefits provided to HCEs, whichever is applicable. The tests applied are determined by use of the ratio of the percentage of HCEs in the separate line of business to the percentage of HCEs employer-wide.

a. Minimum Benefit Required. The minimum benefit rules of this safe harbor are applied to SLOBs that have a HCE percentage ratio of less than 50 percent for the testing year. (50) In this case, the safe harbor will be satisfied if both of the following conditions are met. (51)

(1) at least 80 percent of the nonhighly compensated employees of the SLOB benefit under the defined plan of the employer, and

(2) those nonhighly compensated employees benefiting under the plan receive at least the specified minimum benefits.

For defined benefit plans, this specified minimum benefit results from calculating the accrued benefit of a single life annuity at an accrual rate of .75 percent of the employee's compensation for a cnsecutive five-year period during which the compensation is highest in aggregate with a normal retirement age of 65. (52) For defined contribution plans, the specified minimum benefit is calculated at an allocation rate of at least 3 percent of the employee's compensation for the year. (53)

Alternatively, the minimum benefit standard can be satisfied on the basis of the average benefit accruals or allocations provided to nonhighly compensated employees in a separate line of business. In contrast to the 80-percent requirement in the general rule, the averaging is based on 100 percent of the nonhighly compensated employees in the SLOB. Also, to use the average approach, the employer must still provide the minimum benefit to at least 60 percent of the individual nonhighly compensated employees in the SLOB. (54)

b. Maximum Benefit Allowed. The maximum benefit rules pertain to SLOBs that have a HCE percentage ration or more than 200 percent for the testing year. (55) Each HCE benefiting under the SLOB's plan may receive no more than the specified maximum benefit.

In the case of a defined benefit plan, the maximum benefit is determined by calculating the accrued benefit of a single life annuity at a rate equal to 2.5 percent of the employee's compensation. (56) In the case of a defined contribution plan, the maximum benefit allowed is a contribution of no more than 10 percent of the employee's compensation for the year. (57)

An employer may satisfy the safe harbor with both a defined benefit plan and a defined contribution plan. The combined minimum benefit provided to nonhighly compensated employees from both plan must equal at least 100 percent of the specified minimum benefit required. (58) For example, if a nonhighly compensated employee receives accrued benefits from a defined benefit plan at an aggregate accrual rate of .375 percent of the employee's compensation for a consecutive five-year period (50 percent of the defined benefit minimum detailed above), the employee must receive an allocation under the defined contribution plan of at least 1.5 percent of the employee's compensation for the year (50) percent of the defined benefit minimum detailed above), the employee must receive an allocation under the defined contribution plan of at least 1.5 percent of the employee's compensation for the year (50 percent of the defined contribution minimum detailed above). Again, the combined percentages of benefits provided to the nonhighly compensated employee must be at least 100 percent of the specified minimum benefit required.

Similarly, the combined maximum benefit provided to HCEs from both plans must not exceed 100 percent of the specified maximum benefit allowed, as previously defined. (59) For example, if a HCE reveives accrued benefits from a defined benefit plan at an accrual rate of 1.25 percent of the employee's compensation (50 percent of the defined benefit maximum detailed above), the employee's benefits received under the defined contribution plan cannot exceed 5 percent of the employee's compensation for the year (50 percent of the defined contribution maximum detailed above). Therefore, combined benefits provided from the two plans will not exceed 100 percent of the specified maximum benefit allowed to HCEs.

7. Individual Determination of Administrative Scrutiny. If a SLOB fails to satisfy any of the safe harbors provided by the regulations, an employer may still meet the administrative scritiny requirements by requesting and receiving an individual determination from the Commissioner. (60) An employer is permitted to petition for such a determination only by following the procedures established by the Commissioner. (61) Additionally, the SLOB must have been able to satisfy one of six alternative requirements. (62)

According to Treas. Reg. [section] 1.414(r)-6(c), several factors are reviewed by the Commissioner issue an individual determination of satisfaction of administrative scrutiny by a SLOB. These include separateness of property and services provided to customers by the SLOB in relation to all property and services provided to customers emplyer-wide; separateness of the SLOB's organization and operation; the nature of competition faced by the SLOB in the industry in in which it conducts business; historical and geographical factors; the degree to which the SLOB fails to conform with any of the safe harbor requirements; and any other factors the Commissioner deems to be relevant in granting an individual determination of administrative scrutiny.

8. Rationales underlying Administrative Scrutiny. Certain premises underlie each of the safe harbors as well as the availability of an individual determination of administrative scrutiny. First, the statutory safe harbor -- which evaluates the percentage of HCEs of a separage line of business in relation to the percentage of HCEs employer wide -- is based on the assumption that if a SLOB does not contain an unusually high level of HCEs in relation to other lines of business of the employer, the benefits provided to the employees of this SLOB are less likely to discriminate against nonhighly compensated employees or in favor of HCEs. This assumption is clearly arguable and may be too simplistic.

Second, the industry category safe harbor supposes that if a SLOB can be placed in a category sufficiently dissimilar to other lines of business of the employer, then no examination of benefits provided in a particular SLOB is necessary. This separateness of the nature of the operations of a particular line of business as compared to operations employer-wide is sufficient to qualify it as a separate business, thus precluding the possibility of benefit discrimination under qualified retirement plan regulations.

Third, the premise of the FAS 14 safe harbor is similar to that of the industry category safe harbor. Basically, the IRS contends that separation of an employer's lines of business owing to the requirements of another regulatory agency (i.e., the SEC) is sufficient evidence with which to separate the lines of business for purposes of measuring discrimination of benefits provided to employees of those lines of business.

Fourth, the minimum or maximum benefits safe harbor is designed under a premise much like that of the statutory safe harbor. Generally, this safe harbor attempts to evaluate the benefits provided to each employee of a SLOB to ensure that HCEs are not receiving benefits to the detriment of nonhighly compensated employees within that specific line of business of an employer.

Fifth, the merger and acquisition safe harbor provides a safety valve for SLOBs that are acquired through certain mergers and acquisitions -- a common occurrence in the U.S. economy. Mergers and acquisitions must be entitled to the transition relief under section 410(b)(6)(C).

Sixth, the average benefits safe harbor provides a standard that takes into account the relative level of benefits of one line compared to the level of benefits in other lines. The addition of this safe harbor in the final regulations attempts to add flexibility to the minimum or maximum benefits safe harbor, which provides an absolute standard.

Finally, the process of individual determination by the IRS of the qualification of a line of business as separate acknowledges the fact that some lines of business of individual employers are truly separate lines of business in substance but could not qualify as such under the Treas. Reg. [section] 1.414(r). This process allows consideration of additional specific facts relevant to the operations of a line of business as a separate entity that are not evaluated in the regulations.

VI. CONCLUSION

The regulations under section 414(r) provides significant guidance on determining an employer's organzation as separate lines of business for purposes of testing nondiscrimination of benefits provided under qualified retirement plans. Although the treatment of an employer's sturcture as containing qualified SLOBs is not mandatory, if will provide relief to many employers, particularly those that are large and operate several diverse lines of business with several variations of benefits provided to employees employer-wide. Employers desiring to fall under the SLOB rules should structure their operations in a manner conducive to establishing the independence and self-sufficiency of each line of business, as well as reflecting bona fide business reasons for each SLOB's existence.

Notes

(1) I.R.C. [section] 414(r)(1).

(2) Treas. Reg. 1.414(r)-1(b)(1).

(3) Treas. Reg. [section] 1.414(r)-0.

(4) Treas. Reg. [section] 1.414(r)-1(d)(9).

(5) Id.

(6) Treas. Reg. [section] 1.414(r)-2(b)(1).

(7) Treas. Reg. [section] 1.414(r)-11(b)(5).

(8) Treas. Reg. [section] 1.414(r)-2(b)(2).

(9) Id.

(10) Id.

(11) Treas. Reg. [section] 1.414(r)-2(b)(3).

(12) Treas. Reg. [sections] 1.414(r)-2(b)(3)(ii) and (iii).

(13) Treas. Reg. [section] 1.414(r)-2(b)(3)(iii).

(14) Id.

(15) Treas. Reg. [section] 1.414(r)-3(b)(2).

(16) Id.

(17) Id.

(18) Treas. Reg. [section] 1.414(r)-3(b)(3).

(19) Treas. Reg. [section] 1.414(r)-3(b)(4).

(20) Treas. Reg. [section] 1.414(r)-3(c)(2).

(21) Treas. Reg. [section] 1.414(r)-11(b)(5).

(22) Treas. Reg. [section] 1.414(r)-3(c)(4).

(23) Treas Reg. [section] 1.414(r)-3(c)(4)(ii).

(24) Treas. Reg. [section] 1.414(r)-3(c)(5)(ii).

(25) Treas. Reg. [section] 1.414(r)-3(b)(5).

(26) Treas. Reg. [section] 1.414(r)-3(c)(3)(i).

(27) Treas. Reg. [section] 1.414(r)-11(b)(3).

(28) Treas. Reg. [section] 1.414(r)-1(b)(2)(iv).

(29) Treas. Reg. [section] 1.414(r)-4(b).

(30) Treas. Reg. [section] 1.414(g)-2T, Q & A 9(g).

(31) Treas. Reg. [section] 1.414(r)-4(c)(1).

(32) Further guidance is anticipated to be issued in the near future. The notice is expected to be incorporated in Form 5300 or revised Form 5310.

(33) Treas. Reg. [section] 1.414(r)-4(c)(1).

(34) Treas. Reg. [section] 1.414(r)-4(c)(2).

(35) Treas. Reg. [sections] 1.414(r)-5(b)(1), 1.414(r)-5(b)(2).

(36) Treas. Reg. [section] 1.414(r)-5(b)(4).

(37) Treas. Reg. [section] 1.414(r)-5(b)(5).

(38) Treas. Reg. [section] 1.414(r)-5(c)(1).

(39) Treas. Reg. [section] 1.414(r)-5(c)(1)(i).

(40) Treas. Reg. [section] 1.414(r)-5(c)(1)(ii).

(41) Treas. Reg. [section] 1.414(r)-5(c)(2).

(42) Treas. Reg. [section] 1.414(r)-5(e)(1)(i).

(43) Treas. Reg. [section] 1.414(r)-5(e)(1)(ii).

(44) Treas. Reg. [section] 1.414(r)-5(e)(2)(ii).

(45) Treas. Reg. [section] 1.414(r)-5(e)(3).

(46) Treas. Reg. [section] 1.414(r)-5(d)(3).

(47) Treas. Reg. [section] 1.414(r)-5(d)(1).

(48) Treas. Reg. [section] 1.414(r)-5(f)(2).

(49) Treas. Reg. [section] 1.414(r)-5(f)(3).

(50) Treas. Reg. [section] 1.414(r)-5(g)(2)(i).

(51) Treas. Reg. [section] 1.414(r)-5(g)(2)(ii).

(52) Treas. Reg. [section] 1.414(r)-5(g)(2)(iii).

(53) Treas. Reg. [section] 1.414(r)-5(g)(2)(iv).

(54) Treas. Reg. [section] 1.414(r)-5(g)(2)(iv).

(55) Treas. Reg. [section] 1.414(r)-5(g)(3)(i).

(56). Treas. Reg. [section] 1.414(r)-5(g)(3)(iii).

(57) Treas. Reg. [section] 1.414(r)-5(g)(3)(iv).

(58) Treas. Reg. [section] 1.414(r)-5(g)(4)(ii).

(59) Id.

(60) Treas. Reg. [section] 1.414(r)-6(a).

(61) Treas. Reg. [section] 1.414(r)-6(b)(1).

(62) Treas. Reg. [section] 1.414)r)-6(b)(2).

RAY A. KNIGHT is a professor of accounting at Middle Tennessee State University. He received a B.S. degree in accounting from the University of Houston, an M.A. degree in accounting from the University of Alabama, and a J.D. degree from Wake Forest University. He is a member of the American Institute of Certified Public Accountants, American Bar Association, American Taxation Association, and several other professional organizations. Mr. Knight has published articles in many professional journals, including The Tax Executive.

LEE G. KNIGHT is a professor of accounting at Middle Tennessee State University. She received a B.S. degree in accounting from Western Kentucky Universith, and M.A. and Ph.D. degrees from the University of Alabama. She is a member of the American Accounting Association and the American Taxation Association. Ms. Knight has published articles in may professional journals, including The Tax Executive.

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