September 16, 2009

Congressman Ron Kind (D-WI) introduced H.R. 3586, The S Corporation ESOP Promotion and Expansion Act of 2009, to improve and promote S ESOP laws. In general, the bill would: permit owners of S stock to sell their stock to an ESOP under the same treatment C stock of a private company receives under Internal Revenue Code Section 1042, also known as the ESOP cap gains deferred rollover provision; permit a lender to S corporations to exclude 50% of its interest income if the loan is used for a qualified employer securities loan, modeled after former IRC Section 133; permit an S ESOP to assume the estate tax liability of an estate if S stock of equal value is transferred to the S corporation ESOP; and establish a Federal program in the Department of Labor to encourage S ESOP creation. H.R. 3586 was co-sponsored by Congressman Earl Blumenauer (D-OR).

“The ESOP Association will urge Congress to enact this legislation to aid its 1,000 plus S ESOP members nationwide, and to promote the creation of more S ESOPs,” said Association President J. Michael Keeling. “We will continue to encourage enactment of new laws, such as S. 1612 by Senator Blanche Lincoln, to aid our approximately 500 C ESOP members as well our S ESOP members,” he added.

Association members are encouraged to not only watch their email boxes for more updates on legislative developments impacting their ESOPs, but also to urge their Representatives and Senators to be for pro-ESOP legislative and to stand against any proposals negative to ESOPs.