July 8, 2015 (Washington, DC) – The Tax Reform Working Group on Savings & Investment of the Senate Committee on Finance released a report of their findings for reforming the tax system. Recommendations include the expansion of gain-deferral provisions of Code section 1042 for S ESOPs (employee stock ownership plans) and guaranteeing that small businesses with SBA certification do not lose their status when they become majority employee-owned companies.
S. 1212 would amend the Internal Revenue Code of 1986 and the Small Business Act to expand the availability of ESOPs in S corporations in America.
Page 13 of the report, which is co-chaired by Senator Michael Crapo (R-ID) and Senator Sherrod Brown (D-OH), states: "S Corporation Employee Stock Ownership Plans, or S-ESOPs, have a track record of providing retirement security for employee-owners of both small and large businesses. S. 1212, introduced by Senators Cardin and Roberts, contains several provisions to further encourage employee-ownership in S corporations, including extending the gain-deferral provisions of Code section 1042 to sales of employer stock to S-ESOPs, providing resources to small businesses contemplating making the transition to an ESOP, and ensuring that SBA-certified small businesses do not lose their status by becoming employee owned. The working group supports consideration of these bipartisan proposals; S. 1212 currently has 18 bipartisan cosponsors in addition to Senators Cardin and Roberts, including 9 Republicans, 7 Democrats, and two Independents."