PUBLIC LAW 95-600—NOV. 6, 1978 n
92 STAT. 2855
resulted in the creation of, or an increase in, the basis of any property."
(b) BASIS OF DISTRIBUTEES.—Subsection (d) of section 358 (relating to
26 USC 358.
basis to distributees) is amended to read as follows: "(d) ASSUMPTION OF LIABILITY.—
"(1) IN GENERAL.—Where, as part of the consideration to the taxpayer, another party to the exchange assumed a liability of the taxpayer or acquired from the taxpayer property subject to a liability, such assumption or acquisition (in the amount of the liability) shall, for purposes of this section, be treated as money received by the taxpayer on the exchange. "(2) EXCEPTION.—Paragraph (1) shall not apply to the amount ' of any liability excluded under section 357(c)(3)." 26 USC 357. (c) EFFECTIVE DATE.—The amendments made by subsections (a) and 26 USC 357 (b) shall apply to transfers occurring on or after the date of the ^°^^enactment of this Act. SEC. 366. MEDICAL EXPENSE REIMBURSEMENT PLANS. (a) GENERAL RULE.—Section 105 (relating to accident and health 26 USC 105. plans) is amended by adding at the end thereof the following: "(h) AMOUNT PAID TO HIGHLY COMPENSATED INDIVIDUALS UNDER A DISCRIMINATORY SELF-INSURED MEDICAL EXPENSE REIMBURSEMENT PLAN.—
"(1) IN GENERAL.—In the case of amounts paid to a highly compensated individual under a self-insured medical reimbursement plan which does not satisfy the requirements of paragraph (2) for a plan year, subsection (b) shall not apply to such amounts to the extent they constitute an excess reimbursement of such highly compensated individual. "(2) PROHIBITION OF DISCRIMINATION.—A self-insured medical
reimbursement plan satisfies the requirements of this paragraph only if— "(A) the plan does not discriminate in favor of highly compensated individuals as to eligibility to participate; and "(B) the benefits provided under the plan do not discriminate in favor of participants who are highly compensated individuals. "(3) NONDISCRIMINATORY ELIGIBILITY CLASSIFICATIONS.—
"(A) IN GENERAL.—A self-insured medical reimbursement plan does not satisfy the requirements of subparagraph (A) of paragraph (2) unless such plan benefits— "(i) 70 percent or more of all employees, or 80 percent or more of all the employees who are eligible to benefit under the plan if 70 percent or more of all employees are eligible to benefit under the plan; or "(ii) such employees as qualify under a classification set up by the employer and found by the Secretary not to be discriminatory in favor of highly compensated participants. "(B) EXCLUSION OF CERTAIN EMPLOYEES.—For purposes of subparagraph (A), there may be excluded from consideration— "(i) employees who have not completed 3 years of service; "(ii) employees who have not attained age 25; "(iii) part-time or seasonal employees; "(iv) employees not included in the plan who are included in a unit of employees covered by an agreement
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