# Prohibited Allocations of Securities in an S Corporation
> **IRS** · Temporary regulations. · Published 2004-12-17 · Effective 2004-12-17 · 69 FR 75455
## Document
- **Document number:** 04-27294
- **Category:** other
- **Sub-agency:** IRS
- **Federal Register citation:** 69 FR 75455
- **CFR reference:** 26 CFR 1
- **Publication date:** 2004-12-17
- **Effective date:** 2004-12-17
- **Treasury docket:** TD 9164
## Abstract

This document contains temporary regulations concerning requirements for employee stock ownership plans (ESOPs) holding stock of Subchapter S corporations. The temporary regulations provide guidance on the definition and effects of a prohibited allocation under section 409(p), identification of disqualified persons and determination of a nonallocation year, calculation of synthetic equity under section 409(p)(5), and standards for determining whether a transaction is an avoidance or evasion of section 409(p). These temporary regulations generally affect plan sponsors of, and participants in, ESOPs holding stock of Subchapter S corporations. The text of the temporary regulations also serves as the text of the proposed regulations set forth in the notice of proposed rulemaking on this subject in the Proposed Rules section in this issue of the Federal Register.

## Source
- [Federal Register document](https://www.federalregister.gov/documents/2004/12/17/04-27294/prohibited-allocations-of-securities-in-an-s-corporation)
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