Leveraged ESOP and S Corp for acquisitions

[Guest bdg]

Our company is an S corp and we are considering using a leveraged ESOP to maximize debt in connection with some planned acquisitions. I'm a generalist income tax type and I ordered the NCEO S corp ESOP book. Are there any articles about this? Doesn't IRC Section 404(a)(9)© prevent any benefit over a normal bank loan (i.e., without an ESOP)? Any other considerations/issues/etc.? Any suggestions on finding a good advisor? Thanks very much.

[stephen]

www.nceo.org and www.esopassociation.org are good sites to go to for more information and to look for advisors.

The ESOP association sponsors a technical conference every November in Las Vegas that would be beneficial. They also sponsor an S-Corp conference in February in Orlando and a general ESOP conference in May in Washington DC amongst other conferences.

Note, it seems IRC section 409p will apply to your plan. I strongly suggest you get an ESOP advisor to make sure this will not be an issue for your plan. 409p requires broadly held ownership within the ESOP or there are stiff penalties.

Feel free to e-mail me for additional information.