Succession planning is vital to an owner’s exit strategy and wealth preservation. Most owners are aware of selling to third parties; however selling to an employee stock ownership plan (ESOP) may be a good option.
There can be significant tax benefits to selling to an ESOP:
- Principal payments on the acquisition debt in a leveraged ESOP are tax deductible
- An S-Corp ESOP company is exempt from federal and most state income tax
- ESOP provides a market to sell your stock at fair value, which generally has tax advantages over selling the company’s assets
- Sale of the company stock to an ESOP may be tax deferred or possibly tax free, if certain requirements are met
Bruner-Cox LLP can assist in the following areas:
- Feasibility and structure analysis
- Coordinating and working through the ESOP transaction
- Evaluating and restructuring existing ESOP’s
- Evaluating and analyzing potential acquisition opportunities
- Analyzing repurchase liability
- Preparation of Form 5500 and related schedules
- Performing audits of ESOP’s required by Department of Labor
If you would like to discuss your ESOP or are considering an ESOP transaction and would like additional information, please contact , Partner at 330.497.2000.
