House Resolution 5207, The ESOP Promotion and Improvement Act of 2010, was introduced by Congressman Charles Boustany (LA-7) and Congressman Earl Pomeroy (ND-ATL). H.R. 5207 has four main objectives:
- Improves the 1042 ESOP tax deferral rollover provisions by permitting sellers to the ESOP of an S corporation to utilize this provision.
- Clarifies that dividends paid by C corporations on ESOP stock are not a preference item in calculating the corporate alternative minimum tax.
- Repeals the punitive 10% penalty tax on S corporation distributions from dividends that are passed through to ESOP participants in cash.
- Eliminates a bias against majority-owned ESOPs by clarifying that a non-ESOP small business that is currently eligible for any Small Business Administration program would still be eligible for the SBA program when it becomes a majority-owned ESOP.
We encourage all ESOP companies and their advisors to ask their local Congresspeople to support the bill. More information on the bill and how to contact your Representatives can be found on The ESOP Association’s website at www.esopassociation.org under Government Affairs.