S Corporation ESOP Promotion and Expansion Act of 2009 Introduced

Representatives Ron Kind (D-Wis.) and Earl Blumenauer (D-Ore.) have introduced the S Corporation ESOP Promotion and Expansion Act of 2009. The bill would:

• allow owners of S corporations to get the same tax deferral available to C corporation owners for sales to an ESOP.
• provide that qualifying lenders could exclude 50% of the interest income from loans to qualifying ESOPs (similar to the old "Section 133" loans for ESOPs).
• allow an ESOP to assume estate tax obligations for stock that is transferred by gift or bequest to an ESOP (similar to a provision in ESOP law in the 1980s).
• allow an estate tax deduction equal to 50% of the proceeds from the sale of S corporation stock to an ESOP by the decedent's estate or the decedent's spouse.
• mandate the establishment of an S corporation employee ownership assistance office by the Department of Labor to foster increased employee ownership of S corporations. The S corporation employee ownership assistance office would be required to provide education and outreach to inform people about the possibilities and benefits of employer ownership of S corporations and would provide technical assistance for companies that may be interested in forming S corporation ESOPs.