S Corporation ESOPs: Curbing Abuses and Clarifications

The Internal Revenue Service (IRS) has issued new guidance to resolve technical questions concerning the administartion of employee stock ownership plans (ESOPs) sponsored by Subchapter S corporations (S-corps). In addition, the IRS released an official pronouncement intended to prevent tax practitioners from marketing "grandfathered" S-corp ESOPs to small businesses to take advantage of tax savings associated with ESOPs.

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