S CORPORATIONS AND ESOPs
01.Core Concepts
• S Corporations • Pass-through entity • No more than 100 individual shareholders • One class of stock • ESOPs of S Corporations are not required to make distributions in the form of employer securities • May “bust” the S Corporation status • No allocations of stock to a disqualified person in a non-allocation year • Disqualified person: person who owns (with family members) 20% or more of stock or a person without family ownership who owns 10% or more of the stock. • Non-allocation year: ESOP owns S corporation stock and disqualified persons own at least 50% of S corporation stock.