Reduction of Excess Business Holding Accrual Act

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.