29 Aug 2023
Learn More about the Tax Benefits of ESOPs
Employee stock ownership plans (ESOPs) can be a wonderful tool. They allow employees to share in the employer’s stock growth, put employer stock in (presumably) friendly hands, permit tax-advantaged payback of an ESOP loan and ESOP distributions, and allow dividends on the ESOP stock to help pay back that loan and increase allocations to participant accounts, on a tax-advantaged basis. Learn more!
Related Content
- Employee Stock Ownership Plans: Fundamentals
Learn the benefits of ESOPs, especially how to make dividend payments tax-deductible. The plan document can accomplish this by being written to (1) pay the dividend directly to the participants in cash; (2) pay the dividend to the ESOP and then distribute it to participants, in cash within 90 days of the year-end; (3) at the election of the participant, pay to participants in either of the two methods above or pay to the plan to be reinvested in qualified employer securities; or (4) apply the dividend to make payments on an exempt ESOP loan.
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- Business Entities. Final regulations are issued on applying for the low-income communities’ bonus credit program for the energy investment credit established pursuant to the Inflation Reduction Act of 2022. D. 9979, 88 Fed. Reg. 55506 (Aug. 15, 2023).
- Business Entities. Proposed regulations are issued under R.C. Sections 1502, 1503, 1552, and 1563, primarily revising the consolidated return regulations under I.R.C. Section 1502. 88 Fed. Reg. 52057 (Aug. 7, 2023).
- International Tax. Treasury announces temporary relief for taxpayers in determining whether a foreign tax is eligible for a foreign tax credit under R.C. Sections 901 and 903. The temporary relief applies with respect to Treas. Reg. § 1.901-2(a)and (b) (the definition of a foreign income tax and the net gain requirement), Treas. Reg. § 1.903-1(c)(1)(iv) (jurisdiction to tax excluded income), and Treas. Reg. § 1.903-1(c)(2)(iii) (source-based attribution requirement). Notice 2023-55, 2023-32 IRB 1.
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