Reduction of Excess Business Holding Accrual Act
Sponsored By: Senator Sen. Scott, Rick [R-FL]
Introduced
Summary
This bill would allow certain employee-owned shares repurchased from ESOPs to be treated as outstanding voting stock for private foundations' excess business holdings rules. It would count non-public voting stock that a company buys on or after January 1, 2020 from an employee stock ownership plan in connection with a distribution and then holds as treasury stock, cancelled, or retired as outstanding stock, but only to the extent that doing so would not make permitted foundation holdings exceed 49 percent. Purchases made during the first 10 years after an ESOP is established are excluded. It would also prevent the usual percentage-reduction rule from applying when the decrease in a foundation's percentage is caused by this treatment. The change would apply to taxable years ending after enactment.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 1 benefits, 0 costs, 0 mixed.
ESOP stock counting for foundations
This bill would change how private foundations count some company stock for excess-holding rules. If enacted, foundations would count certain voting shares a company bought from its employee stock ownership plan as outstanding voting stock. The rule would apply only to non‑public voting stock bought on or after January 1, 2020 in connection with an ESOP distribution. It would cover stock held as treasury stock, or that is cancelled or retired. Counting would be limited so permitted holdings do not go over 49 percent. The rule would not apply to purchases made during the first 10 years after an ESOP is set up. A separate clause would not apply when this counting causes a foundation's ownership share to fall. The change would take effect for taxable years ending after enactment.
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Sponsors & CoSponsors
Sponsor
Sen. Scott, Rick [R-FL]
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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