Employee Stock Ownership Plans (ESOPs)

ESOPs offer tax benefits to the sponsoring company and its selling shareholders. Although there may be restrictions, ESOP tax advantages include, but are not limited to, the following:

  • Contributions to the ESOP of cash or shares may be tax deductible.
  • Dividends paid on ESOP shares may be tax deductible.
  • Principal as well as interest paid to banks on ESOP loans may be tax deductible.
  • Selling shareholders are able to defer capital gains and taxes on shares sold to ESOP.

ESOP shares must be appraised every year by a highly qualified, independent business appraiser. Such valuations have many complexities owing to ESOPs’ unique features. ABA professionals have valued hundreds of ESOPs and would be pleased to assist you.

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