ABRC-ESOP

Evan L. Rhodes:: Employee Stock Ownership Plans have been around since the 70’s. However, the Employee Stock Ownership Plan for S-Corporations – what I call S-ESOP – has only been in place for the last nine years. In 1998, Congress took steps to radically reform ESOPs: they decided to include S-Corporations as a type of company that could be sold to an ESOP. Additionally, they provided that if the business was sold to an S-ESOP, the company would be exempt from all income tax on its profits. The money the owner used to pay in taxes could now be used to partially or fully fund the sale of the business to the S-ESOP. Not only does this create a market for smaller companies, it also funds the transaction through tax savings and provides retirement benefits to employees.