PUBLIC LAW 98-369—JULY 18, 1984
98 STAT. 855
"(1) IN GENERAL.—Except as otherwise provided in this subsection, the term 'qualified cost' means, with respect to any taxable year, the sum of— "(A) the qualified direct cost for such taxable year, and "(B) subject to the limitation of section 419A(b), any Post, p. 856. addition to a qualified asset account for the taxable year. "(2) REDUCTION FOR FUNDS AFTER-TAX INCOME.—In the case of any welfare benefit fund, the qualified cost for any taxable year shall be reduced by such fund's after-tax income for such taxable year. "(3) QUALIFIED DIRECT COST.—
"(A) IN GENERAL.—The term 'qualified direct cost' means, with respect to any taxable year, the aggregate amount (including administrative expenses) which would have been allowable as a deduction to the employer with respect to the benefits provided during the taxable year, if— "(i) such benefits were provided directly by the employer, and "(ii) the employer used the cash receipts and disbursements method of accounting. "(B)
TIME WHEN BENEFITS PROVIDED.—For purposes of
subparagraph (A), a benefit shall be treated as provided when such benefit would be includible in the gross income of the employee if provided directly by the employer (or would be so includible but for any provision of this chapter excluding such benefit from gross income). "(C) 60-MONTH AMORTIZATION OF CHILD CARE FACILITIES.—
"(i) IN GENERAL.—In determining qualified direct costs with respect to any child care facility for purposes of subparagraph (A), in lieu of depreciation the adjusted basis of such facility shall be allowable as a deduction ratably over a period of 60 months beginning with the month in which the facility is placed in service. "(ii) CHILD CARE FACILITY.—The term 'child care facility' means any tangible property which qualifies under regulations prescribed by the Secretary as a child care center primarily for children of employees of the employer; except that such term shall not include any property— "(I) not of a character subject to depreciation; or "(II) located outside the United States. "(4) AFTER-TAX INCOME.—
"(A) IN GENERAL.—The term 'after-tax income' means, with respect to any taxable year, the gross income of the welfare benefit fund reduced by the sum of— "(i) the deductions allowed by this chapter which are directly connected with the production of such gross income, and "(ii) the tax imposed by this chapter on the fund for the taxable year. "(B) TREATMENT OF CERTAIN AMOUNTS.—In determining the gross income of any welfare benefit fund— "(i) contributions and other amounts received from employees shall be taken into account, but
- (ii) contributions from the employer shall not be
taken into account.
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