Sales of stock to employee stock ownership plans or certain cooperatives

If— A sale of qualified securities meets the requirements of this subsection if— The qualified securities are sold to— The plan or cooperative referred to in paragraph (1) owns (after application of section 318(a)(4)), immediately after the sale, at least 30 percent of— The taxpayer files with the Secretary the written statement described in subparagraph (B). A statement is described in this subparagraph if it is a verified written statement of— The taxpayer’s holding period with respect to the qualified securities is at least 3 years (determined as of the time of the sale). For purposes of this section— The term “qualified securities” means employer securities (as defined in section 409(l)) which— were not received by the taxpayer in— The term “eligible worker-owned cooperative” means any organization— a majority of the allocated earnings and losses of which are allocated to members on the basis of— The term “replacement period” means the period which begins 3 months before the date on which the sale of qualified securities occurs and which ends 12 months after the date of such sale. The term “qualified replacement property” means any security issued by a domestic operating corporation which— For purposes of this paragraph— The term “operating corporation” means a corporation more than 50 percent of the assets of which were, at the time the security was purchased or before the close of the replacement period, used in the active conduct of the trade or business. The term “operating corporation” shall include— For purposes of applying this paragraph, if— For purposes of clause (i), the term “control” has the meaning given such term by section 304(c). In determining control, there shall be disregarded any qualified replacement property of the taxpayer with respect to the section 1042 sale being tested. For purposes of this paragraph, the term “security” has the meaning given such term by section 165(g)(2), except that such term shall not include any security issued by a government or political subdivision thereof. No sale of securities by an underwriter to an employee stock ownership plan or eligible worker-owned cooperative in the ordinary course of his trade or business as an underwriter, whether or not guaranteed, shall be treated as a sale for purposes of subsection (a). An election under subsection (a) shall be filed not later than the last day prescribed by law (including extensions thereof) for filing the return of tax imposed by this chapter for the taxable year in which the sale occurs. Subsection (a) shall not apply to any gain on the sale of any qualified securities which is includible in the gross income of any C corporation. The basis of the taxpayer in qualified replacement property purchased by the taxpayer during the replacement period shall be reduced by the amount of gain not recognized by reason of such purchase and the application of subsection (a). If more than one item of qualified replacement property is purchased, the basis of each of such items shall be reduced by an amount determined by multiplying the total gain not recognized by reason of such purchase and the application of subsection (a) by a fraction— If a taxpayer disposes of any qualified replacement property, then, notwithstanding any other provision of this title, gain (if any) shall be recognized to the extent of the gain which was not recognized under subsection (a) by reason of the acquisition by such taxpayer of such qualified replacement property. If— Paragraph (1) shall not apply to any transfer of qualified replacement property— If any gain is realized by the taxpayer on the sale or exchange of any qualified securities and there is in effect an election under subsection (a) with respect to such gain, then— the statutory period for the assessment of any deficiency with respect to such gain shall not expire before the expiration of 3 years from the date the Secretary is notified by the taxpayer (in such manner as the Secretary may by regulations prescribe) of— This section shall apply to the sale of stock of a qualified refiner or processor to an eligible farmers’ cooperative. For purposes of this subsection, the term “qualified refiner or processor” means a domestic corporation— which, during the 1-year period ending on the date of the sale, purchases more than one-half of such products to be refined or processed from— For purposes of this section, the term “eligible farmers’ cooperative” means an organization to which part I of subchapter T applies and which is engaged in the marketing of agricultural or horticultural products. In applying this section to a sale to which paragraph (1) applies—