ESOP Taxation: 1042 Rollovers & Qualified Replacement Property (QRP): What are the Benefits & How Can You Qualify for Them?
The key motivation for many ESOP transactions in closely held companies is the ability of the selling shareholder to defer capital gains tax on the sale of shares to an ESOP under Section 1042 of the IRS Code. One condition of Section 1042 is that the selling shareholder purchase qualified replacement property (QRP) with a value equal to the amount received in the qualifying ESOP transaction. There is an opportunity for huge tax savings but you may not be aware of exactly what you need to do in order to qualify for them.
Presented by Steve Greenapple of SES ESOP Strategies.