Stay informed on the latest legal developments impacting employee ownership with timely and concise summaries of key cases and rulings. Learn more about this digest »
Corey Rosen
In Novosel v. Azcon Inc. Employee Benefits Plan Committee, No. 21 C 3080, (N.D. Il, E.D., March 8, 2022), a district court dismissed two claims concerning the valuation of stock for their plaintiff in Azcon’s ESOP, but allowed her to continue a breach of contract claim alleging that Azcon miscalculated her share value and distributed $50,000 less than she was owed.
Corey Rosen
On February 24, the IRS issued proposed regulations for retirement distributions under the SECURE Act. The 273-page proposal deals with a wide variety of issues, such as how RMDs are distributed to heirs after a participant’s death, how annuities are treated, and other issues.
Corey Rosen
In recent years, plaintiffs have been seeking to move to discovery in ESOP litigation based largely on complaints of a drop in share price after a transaction. In Plutzer v. Bankers Trust Company of South Dakota et. al., No. 1:21-cv-03632-MKV (S.D.N.Y., February 28, 2022), a court dismissed a claim against Bankers Trust of South Dakota, the trustee for the ESOP at Tharanco Group.
Corey Rosen
In PLR 202206009, Feb. 11. 2022, the IRS ruled that a taxpayer who sold stock to an ESOP and took the capital deferral treatment available under Section 1042 of the Code will not be treated as having made a disposition of the qualified replacement property purchased after the sale into a grantor trust the taxpayer controls.
Corey Rosen
In Hensiek v. Bd. of Dirs. of Casino Queen Holding Co., No. 3:20-CV-377-DWD (S.D. Ill., Jan. 28, 2022), a federal judge denied an Illinois casino company’s motion to dismiss a proposed class action from former employees who allege the company’s ESOP overpaid for shares in the now closed casino company.
Corey Rosen
In Larson v. Commissioner, T.C. Memo 2022-3, No. 15809-11, (U.S. Tax Court, Feb. 2, 2022), the tax court rejected an appeal by the plaintiff over an assessment of several million dollars in taxation for his nominally restricted stock.
Corey Rosen
In Ahrendsen, et al. v. Prudent Fiduciary Services, LLC, et al., No. 2:21-cv-02157 (E.D., PA, Feb. 2, 2022), a district court allowed an ESOP valuation case against the sellers and the trustee on the case to proceed to trial.
Corey Rosen
In Revenue Procedure 2021-4, the IRS added ESOPs to Form 5307, the form used to submit letter-of- determination requests.
Corey Rosen
In Walsh v. Reliance Trust et. Al., No. 17-CV-04540 (D.C. Minn. Jan. 5, 2022), Reliance Trust and the directors of Kurt Manufacturing agreed on a $9.4 million settlement in an ESOP valuation case. Reliance will pay $8.4 million to the company’s ESOP and the directors and officers of Kurt Manufacturing will pay $989,000.
Corey Rosen
Fiduciaries of the Mohawk Hospital Equipment Inc. ESOP will have to pay $431,000 over claims of excessive compensation paid to themselves and family members.
