119th Congress Taxation
S. 1416: Reduction of Excess Business Holding Accrual Act
Introduced
- Introduced (completed)
- Passed Senate (not reached)
- Passed House (not reached)
- To the President (not reached)
- Became law (not reached)
Summary
This bill treats certain stock repurchased by a corporation from an employee stock ownership plan (ESOP) as outstanding voting stock for purposes of the federal excise tax imposed on a private foundation’s excess business holdings. Thus, a private foundation may exclude such stock in calculating present holdings in a corporation and liability for the excise tax. (Exceptions apply.)
As background, a federal excise tax is imposed on a private foundation that owns more than 20% of the voting stock in a corporation, reduced by the percentage of voting stock held by all disqualified persons (excess business holdings). However, a private foundation with excess business holdings on May 26, 1969 (grandfathered private foundation) may own a greater percentage of voting stock in certain circumstances.
Under the bill, stock is treated as outstanding voting stock if such stock is
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- not readily tradable on an established securities market;
- repurchased from an ESOP on or after January 1, 2020; and
- held by the corporation as treasury stock, cancelled, or retired.
However, such stock is not treated as outstanding voting stock if it is repurchased within the first 10 years of establishing the ESOP or, as a result of the repurchase, the permitted holdings of the private foundation would exceed 49% of the voting stock in the corporation.
Finally, under the bill, such stock does not reduce the percentage of voting stock a grandfathered private foundation may own.
Written by the Congressional Research Service, Library of Congress.
Roll calls
No roll call votes have been held on this bill.
Amendments
No amendments were offered to this bill.
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History
- Introduced in the Senate by Rick Scott.
Show the full action history (2 actions)
- Introduced in Senate
- Read twice and referred to the Committee on Finance.