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The tax bill now before the Senate, and the bill that passed the House, contain no provisions directly affecting ESOPs, nor do they contain previous provisions that would have taxed stock awards at vesting.

On October 6, the House approved a House-Senate conference committee's compromise language on the massive 650-page American Jobs Creation Act tax bill. The bill appears likely to pass the Senate either by mid-October or when Congress returns for a lame-duck post-election session.

On October 22, 2004, the President signed the American Jobs Creation Act tax bill. The bill contains several changes important to S corporation ESOPs and to equity compensation plans.

The Senate-passed version of the tax bill would provide minor relief from the Alternative Minimum Tax (AMT) by allowing the enhanced child credit to be claimed against the AMT. Refundable tax credits would no longer be disallowed as well under AMT calculations.

The Republican tax proposal released on November 1 does not contain provisions that will directly affect ESOPs. There had been some concern that the plan would make changes to retirement plan law, but no significant modifications were proposed.

The 2006 tax bill recently passed by Congress contains a provision allowing individuals who paid the alternative minimum tax (AMT) on the exercise of stock options to take a tax credit of 20% (or, if the original credit is less than $25,000, $5,000 or the full amount of the credit, whichever is l

Two bills to amend the treatment of U.S. corporate income earned overseas that have significant provisions affecting ESOPs and equity compensation continue to face an uncertain fate. The American Jobs Creation Act of 2004 (H.R. 4520) and the Jumpstart Our Business Strength Act (S.

Both the American Jobs Creation Act of 2004 (H.R. 4520) and the Jumpstart Our Business Strength Act (S.

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.

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.