ABRC-ESOP

Evan L. Rhodes: The basic structure of the S-Corp ESOP consists of a trust wherein the single shareholder of that trust is the ESOP. The S-ESOP, by law, is a tax-free entity. This means that the S-Corporation, which is a pass through entity, is taxed at the shareholder level, so the business becomes free of federal taxes. For those with a ‘C’ Corporation and other entity structure, the business can be converted to an ‘S,’ but only after proper tax and legal planning.

Congress encourages ESOPs as a method of strengthening the free private enterprise system and small business growth while simultaneously providing retirement programs for the baby boomers and future generations. Simply put, the more businesses stay open, the more jobs there are resulting in more revenue for the government.