Dividend tax question

I've got a tax/accounting question regarding how to handle dividend payments.  The company made a compensation contribution as well as paid a dividend on preferred shares. (The ESOP holds all of the preferred stock.)  These two payments were then returned to the company as payment for the ESOP loan principle.  These two payments paid off the remaining  ESOP loan balance. The issue has to do with the fact that there were not enough shares available to be released for the "make whole" principle.  There were approximately 54,000 shares available to be released but 71,000 were needed for the dividend to abide by the make whole rule.  How would this payment be accounted for?  How much  of the payment would be tax deductible?

Could you elucidate on what you mean by the “make whole” principle/rule?

You don't want free advice.  Someone needs an ERISA attorney that is good with ESOPs.  I am serious here.  I have been working on ESOPs since the mid 90s and I wouldn't dare advice the client how to clean this up. 

There are deduction, plan qualification and prohibited transaction issues involving failure to adhere to the make-whole rule when dividends paid on allocated shares are used to make ESOP loan payments.   It’s pretty complex, and echoing ESOP guy, you need an experienced ESOP attorney to address these.