Frequently Asked Questions

Employee Ownership FAQs

Common questions about employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), and other forms of employee ownership, from the basics to technical topics.

This FAQ is written primarily for business owners, managers, and advisors involved in setting up or running an employee ownership plan. If you're an employee at an ESOP company looking to understand your own benefits and rights, see our articles on Working at an ESOP Company and The Rights of ESOP Participants.

NCEO employee ownership FAQ hero (keyboard)

What are the rules for taxation of built-in gains when converting from a C to an S corporation?

Built-in gains taxes normally apply when a C corporation converts to S status and sells appreciated assets within a 5-year period.

For details on S Corporation ESOPs, see our book S Corporation ESOPs.

T

Link to this FAQ Topic: S Corporation ESOPs