Tag: employee stock ownership plans

Prevention the Key to ESOPs Not Violating Nonallocation Year Rules

The IRS explains that the rules under IRC Section 409(p) are designed to prevent a group of “disqualified persons” from collectively owning 50% or more of an S corporation’s stock (i.e., the definition of a “nonallocation year”), and discusses methods for preventing violation of the rules.

Pro-ESOP Bill Signed Into Law

Among other things, the Main Street Employee Ownership Act focuses on increasing the role of the Small Business Administration (SBA) in facilitating ESOPs by allowing the SBA to make loans to companies that they can then reloan to ESOPs.