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S Corporation ESOPs: Legal Issues

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This replay was recorded on August 7, 2018.

About This Meeting

S corporations are not taxed directly; rather, taxation is passed through to shareholders. However, to the extent an ESOP owns an S corporation, its share of corporate profits is not taxable for federal, and often state, income tax purposes. (The ESOP trust itself is the shareholder, not the employees in the plan.) Thus, an S corporation 100% owned by an ESOP pays no federal (and often no state) income tax. S corporation ESOPs do not have all the same benefits as C ESOPs; most notably, sellers to an S ESOP cannot defer capital gains taxes on the sale, and corporate ESOP contribution limits can be somewhat lower. There are also special rules to prevent S corporation ESOPs from being used primarily to benefit a small number of people. Nonetheless, S corporation ESOPs can be a tremendous competitive advantage and are expanding at a rapid rate.

This Webinar covers the legal issues you need to know about S corporation ESOPs.


Steven B. Greenapple

presenter photologo

Steiker, Greenapple & Fusco P.C.

Steve has worked with ESOPs for 28 years, has been involved in hundreds of ESOP transactions, and has served as an expert witness in litigation related to ESOPs. Steve is an active member of the NCEO, and of the ESOP Association, where he has served as a state chapter officer and as chair of the national Legislative and Regulatory Committee, and is a trustee of the Employee Ownership Foundation.

Erin Hollis

presenter photo

Marshall & Stevens, Inc.

Erin is a director with Marshall & Stevens Incorporated in Chicago. She is a seasoned speaker, prolific author, and a credentialed member of the American Society of Appraisers, where she is a member of the Business Valuation Committee. She is also a member of the Valuation Advisory Committee and of the Interdisciplinary Advisory Committee on Fiduciary Issues of the ESOP Association and a member of the NCEO.