Reg. § 1.162(k)-1 Disallowance of deduction for reacquisition payments.
(a) In general Except as provided in of this section, no deduction otherwise allowable is allowed under Chapter 1 of the Internal Revenue Code for any amount paid or incurred by a corporation in connection with the reacquisition of its stock or the stock of any related person (as defined in section ). Amounts paid or incurred in connection with the reacquisition of stock include amounts paid by a corporation to reacquire its stock from an ESOP that are used in a manner described in section . See .
(b) Exceptions of this section does not apply to any—
(1) Deduction allowable under section (relating to interest);
(2) Deduction for amounts that are properly allocable to indebtedness and amortized over the term of such indebtedness;
(3) Deduction for dividends paid (within the meaning of section ); or
(4) Amount paid or incurred in connection with the redemption of any stock in a regulated investment company that issues only stock which is redeemable upon the demand of the shareholder.
(c) Effective date This section applies with respect to amounts paid or incurred on or after August 30, 2006.
[T.D. 9282, 71 FR 51473, Aug. 30, 2006]