Bill > S1416

This bill amends the Internal Revenue Code to modify how private foundations are taxed on excess business holdings, specifically focusing on employee stock ownership plan (ESOP) related stock transactions. The legislation allows certain employee-owned stock purchases to be disregarded when calculating a foundation's business holdings, provided the stock meets specific conditions: it is not readily tradable on a public securities market, was purchased by a business enterprise from an ESOP after January 1, 2020, during a plan distribution, and is subsequently held as treasury stock, cancelled, or retired. This means the stock will be "treated as outstanding" for tax calculation purposes, but only to the extent that it would not cause the foundation to exceed permitted ownership percentages. Importantly, this treatment does not apply during the first 10 years after an ESOP is established, and any decrease in business enterprise ownership percentage resulting from this provision will not be subject to previous taxation rules. The amendment becomes effective for taxable years ending after the bill's enactment date, providing a new approach to how private foundations can manage employee-owned stock without triggering excess business holding tax penalties.

Budget and Finance

https://www.congress.gov/bill/119th-congress/senate-bill/1416/all-info