Tax Reform and S Corporation ESOPs

The Senate-House conference committee is expected to release the text of the compromise tax reform bill as we write this update, and a vote is expected in both chambers next week. One provision would set a 23% tax to be paid by the owners of S corporations and other pass-through entities on profits earned by those entities. Under the bills from both chambers, however, ESOPs would remain non-taxpaying entities, so the portion of S corporation profits attributable to the ESOP would retain its current tax treatment.