Employee Ownership Blog

The new tax bill passed by Congress (and to be vetoed by the President) preserves the ability for most S Corporation ESOPs to avoid paying unrelated business income tax (UBIT) on their pro-rata share of corporate earnings.

Neither the House nor Senate tax cut bills now being debated contain the President's proposal to require ESOPs in S corporations to pay unrelated business income tax (UBIT) on their pro-rata share of company earnings.

A new study by Credit Suisse First Boston of the impact of stock options on profitability in banks shows that not showing the cost of options on income statements in 47 banks resulted in earnings being 4% higher than would have been the case if the present value of the options were accounted for

A district court has ordered the former president and chairman of Delta Star, Inc. to repay $3,300,000 to the company's ESOP. In Delta Star, Inc. v. Patton (U.S.

Dana Rohrabacher (R-CA), arguably the most conservative member of Congress, has paired with Bernie Saunders (D-VT), the only Socialist member of Congress, to introduce H.R.

The New York State Bar Association's Tax Section has urged the Administration to change its proposals to tax ESOPs in S corporations.

A federal district court has certified a class of employees to proceed with a lawsuit contending their employer's stock option allocation policies violated Title VII of the Civil Rights Act of 1964 (Carter v. West Publishing Co., M.D. Fla., No. 97-2537-CIV-T-26A, 5/20/99).

Microsoft now estimates that 10,000 of its current regular employees (Microsoft also employs a lot of contract workers) have options worth $1 million or more. Microsoft provides options to about 85% of its regular employees.

A majority of the members of the House Ways and Means Committee have written a letter to the committee's chair and ranking minority member opposing President Clinton's budget proposal to eliminate the UBIT exemption for ESOPs in S corporations.

The Capital Ownership Group (COG) has received a $100,000 grant from the Ford Foundation to create an international network of individuals and organizations interested in proposing and commenting on policy ideas to promote employee ownership.

The Labour Government in the United Kingdom has proposed new legislation to encourage employee ownership. It would replace the existing "Save as You Earn" plan, a highly tax-advantaged savings/stock purchase plan. The new plan would be based on a trust similar to a U.S. 401(k) plan.

Note on June 2: The discussion originally placed under this heading has been deleted because it has now been superseded by an article on these issues elsewhere on this site.