US Code

Public Law 119-73 (01/23/2026)

26 U.S.C. § 1372

Partnership rules to apply for fringe benefit purposes

(a)

General rule

For purposes of applying the provisions of this subtitle which relate to employee fringe benefits—
(1)
the S corporation shall be treated as a partnership, and
(2)
any 2-percent shareholder of the S corporation shall be treated as a partner of such partnership.
(b)

2-percent shareholder defined

For purposes of this section, the term “2-percent shareholder” means any person who owns (or is considered as owning within the meaning of section 318) on any day during the taxable year of the S corporation more than 2 percent of the outstanding stock of such corporation or stock possessing more than 2 percent of the total combined voting power of all stock of such corporation.

Pub. L. 97–354, § 296 Stat. 1682(Added , , .)

Editorial Notes

Prior Provisions

Pub. L. 85–866, title I, § 64(a)72 Stat. 1650Pub. L. 87–29, § 275 Stat. 64Pub. L. 89–38980 Stat. 114Pub. L. 91–683, § 1(a)84 Stat. 2067Pub. L. 94–455, title IX, § 902(c)(3)90 Stat. 1609Pub. L. 95–600, title III, § 34392 Stat. 2843Pub. L. 95–628, § 5(a)92 Stat. 3628section 2 of Pub. L. 97–354A prior section 1372, added , , ; amended , , ; , §§ 2(b)(2), 3(a), , ; , , ; , title XIX, §§ 1901(a)(149), 1906(b)(13)(A), , , 1788, 1834; , , ; , (b), , , related to manner, effect, termination, etc., of an election not to be subject to taxes imposed under this chapter, prior to the general revision of this subchapter by .

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 97–354section 1361 of this titlesection 6(d) of Pub. L. 97–354section 1361 of this titleSection applicable to taxable years beginning after , except that in the case of a taxable year beginning during 1982, sections 1362(d)(3), 1366(f)(3), and 1375 of this title shall apply and subsec. (e)(5) of this section as in effect on the day before , shall not apply, see section 6(a), (b)(3), of , set out as a note under . For additional provisions relating to the treatment of existing fringe benefit plans and the application of this section, see , set out as a note under .