August 7, 2009 (Washington, DC) – The ESOP Association hails the introduction of S. 1612, the ESOP Promotion and Improvement Act of 2009, introduced by Senator Blanche L. Lincoln (D-AR) on August 6, 2009 as an important step to broaden ownership in the U.S. Senator Mary L. Landrieu (D-LA) is an original co-sponsor. The ESOP Association is the national trade association representing approximately 2,500 members in all 50 states.
In summary, the proposed Act will repeal the punitive 10% penalty tax on S corporations’ distributions from current earnings, also referred to as dividends, paid on the distributions from current earnings that are passed through to ESOP participants in cash; clarify that dividends paid by C corporations on ESOP stock are not a preference item in calculating the corporate alternative minimum tax; permit sellers of stock to an ESOP on an S corporation to utilize the ESOP tax benefit referred to as the tax deferred rollover or the 1042 treatment; permit proceeds received from a 1042 transaction to be invested in mutual funds consisting of operating U.S. corporation securities; redefine what is a 25% or more owner for purposes of IRC 1042 to be 25% or more ownership of voting stock, or 25% or more ownership of all stock of the corporation, not 25% of any class of stock; clarify that a small business certified by the Small Business Administration for SBA programs is still eligible for SBA status, if acquired 50% or more by an ESOP, if the workforce and economic demographics of the small business is the same after the ESOP acquisition.
“As a senior member of the Senate Committee on Finance, and chair of the Committee’s Social Security, Pension, and Family Policy Subcommittee, there could be no better proponent in Congress for equitable ownership polices for all working Americans than Senator Lincoln,” stated J. Michael Keeling, president of The ESOP Association. “The ESOP community also appreciates that Senator Lincoln is joined by Senator Mary L. Landrieu, the chair of the U.S. Senate Committee on Small Business and Entrepreneurship with jurisdiction over small business provisions.”
For additional information about S. 1612, please visit The ESOP Association’s website, www.esopassociation.org and the Employee Ownership Blog, http://www.esopassociation.org/blog/default.asp.
The core cause of The ESOP Association is the belief that employee ownership will improve American competitiveness, increase productivity through greater employee participation, and strengthen our free enterprise economy.
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