Reduction of Excess Business Holding Accrual Act
Sponsored By: Representative Rep. Steube, W. Gregory [R-FL-17]
Introduced
Summary
ESOP-derived voting stock exemption. This bill would let private foundations treat certain nonpublic voting shares that a business buys from an Employee Stock Ownership Plan as outstanding voting stock for the excess business holdings tax, while capping the effect at 49 percent and excluding plans in their first 10 years.
Show full summary
- Private foundations: Could count some ESOP-sourced, nonpublic voting stock toward their permitted holdings, potentially raising the share of a business they may hold up to a 49 percent cap.
- Businesses and ESOP participants: Applies when a business purchases distributed ESOP stock on or after January 1, 2020 and holds it as treasury stock, cancels it, or retires it. The rule does not apply to purchases from plans during the first 10 years after the plan is established.
- Administrative effect: The bill says that any drop in a foundation's percentage caused by this treatment will not trigger the separate statutory adjustment in Section 4943(c)(4)(A)(ii), preventing a related technical penalty from applying.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 1 benefits, 0 costs, 0 mixed.
New employee stock plan rule for foundations
This bill would change how private foundations count voting stock for the excess business holdings tax. Non‑public shares a company buys from its employee stock ownership plan (ESOP) on or after January 1, 2020, in connection with a plan distribution, could be treated as outstanding if held as treasury, cancelled, or retired. This would not apply to ESOP purchases made during the plan’s first 10 years and would only count until allowed holdings reach 49%. It would also prevent a related rule from undoing any decrease in a foundation’s ownership share caused by this change. The rule would apply to tax years ending after enactment, and the purchase rule would apply to tax years starting after December 31, 2019.
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Sponsors & CoSponsors
Sponsor
Rep. Steube, W. Gregory [R-FL-17]
FL • R
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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