PUBLIC LAW 104-191—AUG. 21, 1996
110 STAT. 2091
applicable period shall be for any number of months
(not greater thsin 12) specified in the election and
may not be changed by the taxpayer without the consent of the Secretary.
"(3) KEY PERSON.— For purposes of paragraph (1), the term
Tcey person' means an officer or 20-percent owner, except that
the number of individuals who may be treated as key persons
with respect to any taxpayer shall not exceed the greater of—
" (A) 5 individuals, or
"(B) the lesser of 5 percent of the total officers and
employees of the taxpayer or 20 individuals.
"(4) 20-PERCENT OWNER.— For purposes of this subsection,
the term '20-percent owner' meems—
"(A) if the taxpayer is a corporation, any person who
owns directly 20 percent or more of the outstanding stock
of the corporation or stock possessing 20 percent or more
of the total combined voting power of all stock of the
corporation, or
"(B) if the taxpayer is not a corporation, any person
who owns 20 "percent or more of the capital or profits
interest in the employer.
" (5) AGGREGATION RULES. —
" (A) IN GENERAL.—For purposes of paragraph (4)(A)
and applying the $50,000 limitation in paragraph (1)—
"(i) all members of a controlled group shall be
treated as one taxpayer, and
"(ii) such limitation shall be allocated among the
members of such group in such manner as the Secretary may prescribe.
"(B) CONTROLLED GROUP. —For purposes of this paragraph, all persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o)
of section 414 shall be treated as members of a controlled
group.".
(c) EFFECTIVE DATES.—
26 USC 264 note.
(1) IN GENERAL.— The amendments made by this section
shall apply to interest paid or accrued after October 13, 1995.
(2) TRANSITION RULE FOR EXISTING INDEBTEDNESS.—
(A) IN GENERAL.—In the case of—
(i) indebtedness incurred before January 1,
1996, or
(ii) indebtedness incurred before January 1, 1997
with respect to any contract or policy entered into
in 1994 or 1995,
the amendments made by this section shall not apply to
qualified interest paid or accrued on such indebtedness
after October 13, 1995, and before Jginuary 1, 1999.
(B) QUALIFIED INTEREST.— For purposes of subparagraph (A), the qualified interest with respect to any indebtedness for any month is the amount of interest (otherwise
deductible) which would be paid or accrued for such month
on such indebtedness if—
(i) in the case of any interest paid or accrued
after December 31, 1995, indebtedness with respect
to no more than 20,000 insured individuals were tgJcen
into account, and
�
