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.

What happens when qualified replacement property goes into an estate?

To the extent the qualified replacement property has not been disposed of, there is a "step up" in basis, so heirs pay no capital gains tax (but estate taxes are due).

For more details, see Selling to an ESOP and Financing the Deal and the ESOP Pre-Feasibility Toolkit.

Link to this FAQ Topic: Tax Benefits to the Seller & Company

Related Resources

ESOP Tax Advantage Calculator

This calculator illustrates some of the tax benefits afforded to ESOPs. Taking basic company financial information as inputs, it outlines the potential tax effects of an ESOP transaction under various scenarios.

Try the Calculator

Understanding Tax Benefits and Contribution Limits for ESOPs

A guide to the tax incentives for ESOPs, which can apply to the sponsoring company but also the selling shareholder(s), employees, and lenders.