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Reduction of Excess Business Holding Accrual Act
To amend the Internal Revenue Code of 1986 for purposes of the tax on private foundation excess business holdings to treat as outstanding any employee-owned stock purchased by a business enterprise pursuant to certain employee stock ownership retirement plans.
Summary
This bill amends the Internal Revenue Code to modify how private foundations calculate their excess business holdings tax when a business repurchases voting stock from an employee stock ownership plan (ESOP). Under the change, when a business holds stock purchased from an ESOP as treasury stock or retires it, that stock is treated as "outstanding" for purposes of calculating the private foundation's tax on excess business holdings, but only if certain conditions are met and the treated holdings do not exceed 49 percent. The provision applies to stock purchases by the business from ESOPs on or after January 1, 2020, and excludes stock purchased during the first 10 years of a plan's establishment. The amendment applies to taxable years ending after the date of enactment.
AI-generated plain-language summary of the bill text — neutral, and may be imperfect. See the full text below for the exact wording.
Sponsor (1)
- Sen. Scott, Rick [R-FL] (R-FL)
Actions (2)
- Apr 10, 2025 Read twice and referred to the Committee on Finance. · senate
- Apr 10, 2025 Introduced in Senate
Similar bills (6)
Bills with similar text or summary — includes reintroductions across Congresses. Ranked by semantic similarity of the bill text (computed locally); a neutral discovery aid, not a claim the bills are duplicates.
Full text
IN THE SENATE OF THE UNITED STATES
April 10, 2025
Mr. Scott of Florida introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 for purposes of the tax on private foundation excess business holdings to treat as outstanding any employee-owned stock purchased by a business enterprise pursuant to certain employee stock ownership retirement plans.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the “Reduction of Excess Business Holding Accrual Act”.
SEC. 2. CERTAIN PURCHASES OF EMPLOYEE-OWNED STOCK DISREGARDED FOR PURPOSES OF FOUNDATION TAX ON EXCESS BUSINESS HOLDINGS.
(a) In General.—Section 4943(c)(4)(A) of the Internal Revenue Code of 1986 is amended by adding at the end the following new clauses:
“(v) For purposes of clause (i), subparagraph (D), and paragraph (2), any voting stock which—
“(I) is not readily tradable on an established securities market,
“(II) is purchased by the business enterprise on or after January 1, 2020, from an employee stock ownership plan (as defined in section 4975(e)(7)) in which employees of such business enterprise participate, in connection with a distribution from such plan, and
“(III) is held by the business enterprise as treasury stock, cancelled, or retired, shall be treated as outstanding voting stock, but only to the extent so treating such stock would not result in permitted holdings exceeding 49 percent (determined without regard to this clause). The preceding sentence shall not apply with respect to the purchase of stock from a plan during the 10-year period beginning on the date the plan is established.
“(vi) Clause (ii) shall not apply with respect to any decrease in the percentage of holdings in a business enterprise by reason of the application of clause (v).”.
(b) Effective Date.—The amendment made by this section shall apply to taxable years ending after the date of the enactment of this Act. <all>
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