### Question
What is the definition of nonallocation year?


### Answer
The definition of **nonallocation year** is as follows in *26 U.S.C. § 409*:

> any plan year of an employee stock ownership plan if, at any time during such plan year—


(i) such plan holds employer securities consisting of stock in an S corporation, and


(ii) disqualified persons own at least 50 percent of the number of shares of stock in the S corporation

#### Citation:
  - *26 U.S.C. § 409*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter D-Deferred Compensation, Etc. > PART I-PENSION, PROFIT-SHARING, STOCK BONUS PLANS, ETC. > Subpart A-General Rule**

