ESOPs

Ice Miller provides legal and consulting services on the feasibility, design and implementation of employee stock ownership plans (ESOPs) and ESOP transactions. ESOPs offer unique and tax-advantaged solutions for difficult corporate, financial, shareholder, and even community issues. An ESOP loan transaction allows the shareholder of a closely held business to cash out of the business for reinvestment in a diversified portfolio on a tax-advantaged basis. ESOP loans can provide tax-advantaged financing for corporate rebuilding, expansion, acquisition, and management buyouts.

ESOPs and ESOP loan transactions can provide the market and capital for succession planning in a closely held business as well as to assure the company survives successive generations of family and owner-managers. The use of a leveraged ESOP is an important alternative to the sale of a business, and can help keep a local business in the community.

ESOPs and ESOP loan transactions provide solutions, in part, because of the extraordinary tax advantages available only in ESOP transactions, including:

• Shareholders may rollover tax free sale proceeds from an ESOP;
  
• Corporations can deduct principal as well as interest on ESOP loans;
  
• Corporations can deduct dividends paid on ESOP stock; and
  
• S corporation ESOPs can provide significant shelter from federal and state taxes.

ESOPs also provide cost effective employee benefits in the form of retirement benefits and wealth creation, and through ownership in the sponsoring company encourages teamwork and productivity.

Click here to learn about ESOPS for The Closely Held Company