[Code of Federal Regulations]
[Title 26, Volume 5]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.414(r)-4]

[Page 737-738]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.414(r)-4  Qualified separate line of business--fifty-employee 
and notice requirements.

    (a) In general. This section sets forth the rules for determining 
whether a separate line of business (as determined under Sec. 1.414(r)-
3) satisfies the 50-employee and notice requirements of Sec. 1.414(r-
1(b)(2)(iv) (B) and (C), respectively.
    (b) Fifty-employee requirement. A separate line of business 
satisfies the 50-employee requirement of Sec. 1.414(r)-1(b)(2)(iv)(B) 
for a testing year only if on each day of the testing year there are at 
least 50 employees who provide services to the separate line of business 
for the testing year and do not provide services to any other separate 
line of business of the employer for the testing year within the meaning 
of Sec. 1.414(r)-3(c)(5). For this purpose, all employees of the 
employer are taken into account (including collectively bargained 
employees), except employees described in Sec. 1.414(q)-1, Q&A-
9(g)(i.e., the same employees, subject to certain modifications, who are 
excluded in determining the number of employees in the top-paid group 
under section 414(q)(4)).
    (c) Notice requirement--(1) General rule. A separate line of 
business satisfies the notice requirement of Sec. 1.414(r)-
1(b)(2)(iv)(C) for a testing year only if the employer notifies the 
Secretary that it treats itself as operating qualified separate lines of 
business for the testing year in accordance with Sec. 1.414(r)-1(b). 
The employer's notice for the testing year must specify each of the 
qualified separate lines of business operated by the employer and the 
section or sections of the Code to be applied on a qualified-separate-
line-of-business basis. See Sec. 1.414(r)-1(c). The employer's notice 
must take the form, must be filed at the time and the place, and must 
contain any additional information prescribed by the Commissioner in 
revenue procedures, notices, or other guidance of general applicability. 
No other notice, whether actual or constructive, satisfies the 
requirement of this paragraph (c).
    (2) Effect of notice. Once an employer has provided the notice 
prescribed in this paragraph (c) for a testing year, and the time for 
filing the notice for the testing year has expired without its being 
modified, withdrawn, or revoked, the employer is deemed to have 
irrevocably elected to apply the requirements of the section or sections 
of the Code specified in the notice separately with respect to the 
employees of each qualified separate line of business

[[Page 738]]

specified in the notice for all plan years that begin in the testing 
year. The Commissioner may, in revenue procedures, notices, or other 
guidance of general applicability, provide for exceptions to the rule in 
this paragraph (c)(2) as well as for the effect that will be given to 
the employer's notice for purposes of any future testing year.

[T.D. 8376, 56 FR 63446, Dec. 4, 1991, as amended by T.D. 8548, 59 FR 
32919, June 27, 1994]