Guest Blog: New EO Legislation Passes in PA
The Pennsylvania Center for Employee Ownership is pleased to announce that employee ownership legislation has successfully passed in the Pennsylvania House and is on to the Senate. Pennsylvania is one of only a small number of states that do not currently mirror the federal Section 1042 rules. By making an election under Section 1042, sellers of C corporations can defer 100% of capital gains tax when selling to their employees in an ESOP. The bill (PA HB-285) would adopt the rules of Section 1042 (as well as Section 402(e)(4), regarding net unrealized appreciation) in Pennsylvania state tax law.
Thanks to the efforts of PaCEO stalwart Dan Zugell of Business Transition Advisors (BTA) and the legal assistance of Ed Renenger of SES ESOP Strategies, the bill, sponsored by Rep. Daryl Metcalfe of Butler County, has been passed by a bipartisan group of lawmakers. It is our hope that this measure will provide an additional incentive to selling shareholders to transition their business to employee ownership.
The PaCEO has a single purpose, to raise awareness about the remarkable benefits of employee ownership in its many forms. We are enthused that this legislation has already created significant interest within the state government and, we expect, will create a path for even greater opportunities in the future. We hope to report on other very beneficial developments very shortly.
We are grateful for the partnership of our many volunteers, and the tremendous support of our friends and collaborators at the NCEO.