Jump to content

Code Section 4960 Apply to ESOPs?

Recommended Posts

Others may have given this more thought, and I have not reviewed in any depth, but I would think in most ESOP-owned companies you would meet one or more of the exceptions in determining the five highest-compensated employees under 53.4960-1(d)(2) such that the company's employees would not become covered employees with respect to the ESOP as an ATEO. 

Would be interested to hear other opinions.

Link to comment
Share on other sites

My initial impression is that the tax would not apply since the exec is employed by the company owned by the ESOP and not the ESOP itself, which is the Sec 501(a) tax-exempt entity under Sec 4960.  The company may not be taxed on corporate income if it is an S Corp., but that does not make it a tax-exempt entity for purposes of Sec 4960.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Create New...