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§ 12.2 CHARITABLE REMAINDER ANNUITY TRUST RULESapplicable to the contributions; 115 and (5) the employer whose employees are coveredby the plan files with the IRS a verified written statement consenting to theapplication of certain taxes 116 with respect to the employer. 117The term qualified gratuitous transfer does not include a transfer of qualifiedemployer securities to an employee stock ownership plan unless: (1) the planwas in existence on August 1, 1996; (2) at the time of the transfer, the decedentand members of the decedent’s family 118 own (directly or constructively 119 ) nomore than 10 percent of the value of the outstanding stock of the corporationinvolved; and (3) immediately after the transfer, the plan owns 120 at least 60 percentof the value of the outstanding stock of the corporation. 121A plan contains the requisite provision if it provides that: (1) the qualifiedemployer securities so transferred are allocated to plan participants in a mannerconsistent with nondiscrimination rules; 122 (2) plan participants are entitled todirect the plan as to the manner in which the securities that are entitled to voteand are allocated to the account of the participant are to be voted; (3) an independenttrustee 123 votes the securities so transferred that are not allocated toplan participants; (4) each participant who is entitled to a distribution from theplan has the right to receive distributions in the form of stock and can requirethe employer to repurchase any shares distributed under a fair valuation formula;124 (5) the securities are held in a suspense account under the plan to beallocated each year, up to the limitations on contributions and benefits, 125 afterfirst allocating all other annual additions for the limitation year, up to the contributionlimitations; 126 and (6) on termination of the plan, all securities so transferredthat are not allocated to plan participants as of the termination are to betransferred to or for the use of a charitable organization. 127If any portion of the assets of the plan attributable to securities acquired bythe plan in a qualified gratuitous transfer are allocated to the account of (1) anyperson who is related to the decedent 128 or a member of the decedent’s family, 129or (2) any person who, at the time of the allocation or at any time during the oneyearperiod ending on the date of the acquisition of qualified employer securities115 Id.116 IRC §§ 4978, 4979A.117 IRC § 664(g)(1).118 IRC § 2032A(e)(2).119 IRC § 318(a).120 That is, owns after the application of IRC § 318(a)(4).121 IRC § 664(g)(2).122 IRC § 401(a)(4).123 The term independent trustee means a trustee who is not a member of the decedent’s family (IRC §2032A(e)(2)) or a 5 percent shareholder (see note 130).124 IRC § 409(h)(1)(A), (B). A valuation formula is not considered fair if it takes into account a discount for minorityinterests. H. Rep. No. 105-148, 105th Cong., 1st Sess. 394 (1997).125 IRC § 415(c).126 IRC § 415(c), (e).127 IRC § 664(g)(3). A plan does not fail to be a qualified plan (IRC § 401(a)) by reason of meeting the requirementsof these six rules.If the requirements of the sixth of these rules are not met with respect to any securities, an excise tax is imposedon the employer that maintains the plan; the tax is designed to recapture the estate taxes that would havebeen due had the transfer to the employee stock ownership plan not occurred. IRC § 664(g)(6).128 IRC § 267(b).129 IRC § 2032A(e)(2). 425