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.

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When S corporation distributions are used to repay an ESOP debt in an S corporation, can they be paid on both allocated and unallocated shares?

Yes. As a result of tax law changes passed in 2004, ESOPs in S corporations can now use distributions on allocated and unallocated shares to repay an ESOP loan.

For details on S corporation ESOPs, see S Corporation ESOPs.

Link to this FAQ Topic: S Corporation ESOPs