IRS Rules That Over-the-Counter Market Does Not Create Readily Tradable Stock

In PLR 200052014, the IRS ruled that owners of a company listed on the over-the-counter market can sell to their company ESOP and take Section 1042 rollover treatment on the sale because the over the counter market does not provide sufficient trading volume to make a stock readily tradable. In this ruling, the IRS added a new criterion for determining readily tradable by saying the over-the-counter market does not provide the kind of shareholder protection and listing standards required by other exchanges.