ESOP Qualification Revoked

In Beal Bros. Management Corp. v. Commissioner (T.C., No. 10871-99R, T.C. Memo. 2001-234, 9/6/01), the IRS ruled that Beal Brothers Management Corporation's ESOP did not meet minimum participation standards. The company set up an ESOP for its four employees in 1987, then bought a manufacturing company and merged the manufacturer into the parent. The manufacturer had 41 employees.