Employee Stock Ownership Plan (ESOP) Answer Book, Fifth Edition

SKU:10048437

Brian M. Pinheiro, Daniel B. Lange

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Product Line	Wolters Kluwer Legal & Regulatory U.S.
Product SKU	10048437

Overview

Employee Stock Ownership Plan Answer Book covers the many regulations, interpretations, rulings, and cases that seek to interpret the laws governing the design, administration, and operation of ESOPs. This practical manual focuses on the nuts and bolts of ESOP design and mechanics so that professionals can find new and creative uses for the ESOP model.

Employee Stock Ownership Plan Answer Book is written in simple, straightforward language and avoids technical jargon, and includes citations of authority if additional research is required.

Employee Stock Ownership Plan Answer Book has been completely updated and revised. Highlights of the Fifth Edition include:

A summary of advantages and disadvantages of ESOPs, the various planning opportunities ESOPs present, and the significant risks that should be considered
An outline of the legal requirements for structuring an ESOP, primarily arising from the Internal Revenue Code
A discussion of the rules for deducting various amounts contributed to an ESOP, distinguishing how such rules differ from rules in other types of retirement plans
A discussion of the complex fiduciary duties and relationships inherent in the unique structure of an ESOP. More than any other type of retirement plan, fiduciaries of ESOPs run the risk of engaging in prohibited self dealing
The issues that arise in valuing companies owned in whole or in part by an ESOP
A detailed description of the special tax advantages for shareholders who sell their shares to an ESOP in a transaction that satisfies Code Section 1042, usually as part of a corporate ownership succession strategy
An overview of the securities laws implicated by the employer securities held within an ESOP
An explanation of ESOP leveraging - perhaps the most unique of the features of an ESOP - which allows the ESOP to be used by the sponsoring employer to obtain tax-advantaged corporate financing
An in-depth look at special issues arising in ESOPs sponsored by Subchapter S corporations
A discussion of the many uses of ESOPs in corporate merger and acquisition transactions, and the special treatment that often must be afforded to the ESOP fiduciaries who control the disposition of the employer securities held by the ESOP

Note: Online subscriptions are for three-month periods.

Previous Edition: Employee Stock Ownership Plan (ESOP) Answer Book, Fourth Edition ISBN 9781454810315

1. Overview

ESOP Basics
History of ESOPs

2. Risks and Rewards of Establishing an ESOP

Benefits and Advantages of ESOPs
Risks and Disadvantages of ESOPs
Repurchase Obligation: The Ultimate Cost

3. Basic ESOP Requirements

Structure of an ESOP
Invested Primarily in Qualifying Employer Securities
Acquisition of Employer Securities
Section 401(a) Tax-Qualification Requirements
Diversification
Timing of Distributions
Forms of Distribution
Put Option Requirement: The Right to Demand Employer Securities
Rebalancing and Reshuffling
Voting Rights

4. Deductibility

General ESOP Deduction Rules
Deducting Dividends

5. Fiduciary Obligations in ESOPs

Identification of ERISA Fiduciaries
Delegating Fiduciary Duties
Applying the ERISA Fiduciary Duties to ESOP Fiduciaries
Breach of Fiduciary Duty and Mitigation of Liability

6. ESOPs and Prohibited Transactions

Statutory Requirements
Exemptions from Prohibited Transactions
Adequate Consideration

7. Valuation

Determining the ESOP’s Value
The Independent Appraiser

8. Section 1042 Transactions

Overview of Code Section 1042
Written Statements of Election and Purchase
STATEMENT OF CODE SECTION 1042 ELECTION
Qualified Securities Test
ESOP Ownership Test
Qualified Replacement Property Test
Employer's Verified Written Statement of Consent
Deferred Taxation of Section 1042 Transaction Proceeds
Prohibited ESOP Allocations to Shareholders
Donations of Securities to an ESOP

9. Securities Reporting and ESOPs of Publicly Traded Companies

Securities Considerations
ESOPs Sponsored by Publicly Traded Companies

10. Leveraged ESOPs

Leveraging: A Unique ESOP Feature
Exempt Loans
Refinancing Exempt Loans
Mechanics of a Leveraged ESOP
Repayment of Exempt Loans and Release of Employer Securities

11. ESOPs Maintained by Subchapter S Corporations

Subchapter S Corporation ESOP Basics
Taxation of Subchapter S Corporation ESOPs
Subchapter S Corporation ESOP Anti-Abuse Rules

12. Mergers and Acquisitions: Transactions with ESOPs as Buyers or Sellers

ESOPs and M&A Transactions
Acquisitions
Divestitures
Sale of the Company Sponsoring the ESOP
Other Transactions and Considerations

APPRENDICES

Response to Technical Assistance Request (#1) Concerning Immediate Resale Provisions in ESOPs
Response to Technical Assistance Request (#2) With Regard to Language That Is Required To Be Included in an ESOP
Response to Technical Assistance Request (#4) Regarding Rebalancing and Reshuffling Provisions in ESOPs and Stock Bonus Plans
Response to Technical Assistance Request (#5) With Regard to Reshuffling Provisions in ESOPs Designed To Prevent the Occurrence of a Nonallocation Year
Form S-8 - Registration Statement Under the Securities Act of 1933
IRS Form 2553 - Election by a Small Business Corporation

Employee Stock Ownership Plan (ESOP) Answer Book, Fifth Edition

Overview

Table Of Contents

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