Employee Benefits Law Blog

Owners usually ask this sooner or later: “Great, so what does an ESOP do for my taxes?” Depending on your entity type, the answer can be “a lot.” Employee Stock Ownership Plans (ESOPs) offer tax advantages that most third-party buyers simply can’t replicate.

1) If you’re a C-Corp: Sell at least 30% of your stock to an ESOP and you may be able to defer capital gains by reinvesting proceeds into certain qualified replacement securities. There are rules and timing requirements (it’s tax law), so get good legal counsel—but when structured correctly and held long term ...