§ 280H. Limitation on certain amounts paid to employee-owners by personal service corporations electing alternative taxable years
(a)
General rule
If—
(1)
an election by a personal service corporation under section
444 is in effect for a taxable year, and
(2)
such corporation does not meet the minimum distribution requirements of subsection (c) for such taxable year,
then the deduction otherwise allowed under this chapter for applicable amounts paid or incurred by such corporation to employee-owners shall not exceed the maximum deductible amount. The preceding sentence shall not apply for purposes of subchapter G (relating to personal holding companies).
(b)
Carryover of nondeductible amounts
If any amount is not allowed as a deduction for a taxable year under subsection (a), such amount shall be treated as paid or incurred in the succeeding taxable year.
(c)
Minimum distribution requirement
For purposes of this section—
(1)
In general
A personal service corporation meets the minimum distribution requirements of this subsection if the applicable amounts paid or incurred during the deferral period of the taxable year (determined without regard to subsection (b)) equal or exceed the lesser of—
(d)
Maximum deductible amount
For purposes of this section, the term “maximum deductible amount” means the sum of—
(e)
Disallowance of net operating loss carrybacks
No net operating loss carryback shall be allowed to (or from) any taxable year of a personal service corporation to which an election under section
444 applies.
(f)
Other definitions and special rules
For purposes of this section—
(1)
Applicable amount
The term “applicable amount” means any amount paid to an employee-owner which is includible in the gross income of such employee, other than—