H.R. 2041: To modify the definition of fiduciary under the Employee Retirement Income Security Act of 1974 to exclude appraisers of employee stock ownership plans was introduced on May 17, 2013 by Rep. Brett Guthrie [R-KY2] and is currently co-sponsored by Jenkins, Lynn [R-KS2] and Loebsack, David [D-IA2].  It has been referred to the House Committee on Education and the Workforce.

Business owners often put off Succession Planning or even contemplating the thought of selling their business because they are not ready to retire or they have not identified or properly trained their replacements.  They may also legitimately worry about the loss of control when selling to a third party.  Including an ESOP in the Business Succession Plan enables a business owner to sell part or all of their company, Tapping into an Otherwise Illiquid Asset and Providing the Business Owner with Liquidity and Diversification, while remaining in control of the day-to-day operations of the company.

The ESOP Association announced the winners of the 2013 Annual Awards for Communications Excellence (AACE):

Are you beginning to consider your business transition alternatives?  Whether you are looking for an exit strategy in the near future or are satisfying your succession planning responsibilities, all business owners will eventually need to find a buyer for their business.  The lack of a qualified buyer willing and able to pay full fair market value creates a problem for many business owners, especially in our current economic environment.  This can especially be a problem for small business and businesses located in rural areas or specialized industries. 

Our most recent Update on FASB ESOP Disclosure Requirements Effective in 2012 discussed the April 10, 2013 FASB board meeting and the decision to defer the regulations indefinitely. 

Earlier this week we discussed how President Obama's 2014 Budget Eliminates ESOP 404(k) Dividends and the related comments from the ESOP Association.  I wanted to share the General Explanations of the Administration’s Fiscal Year 2014 Revenue Proposals (Greenbook) as it relates to President Obama's 2014 Budget Proposal to Eliminate the ESOP 404(k) Dividend Deduction:

ELIMINATE SECTION 404(k) EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) DIVIDEND DEDUCTION FOR LARGE C CORPORATIONS

Over the last few years many sellers opted to lock in the historically low long-term capital gains tax rates by selling to an ESOP as part of their Business Exit Strategy.  Selling to an ESOP is always a stock sale which is more favorable from a legal and tax standpoint than a traditional asset sale for many reasons, including taxation at capital gains rates. 

S. 742: The Promotion and Expansion of Private Employee Ownership Act of 2013 was introduced on April 16, 2013, by Sen. Benjamin Cardin [D-MD],and is currently co-sponsored by Blunt, Roy [R-MO], Klobuchar, Amy [D-MN], Landrieu, Mary [D-LA], Roberts, Pat [R-KS], Stabenow, Debbie [D-MI], and Thune, John [R-SD].  It has been referred to the Senate Finance committee.

Historically the financial reporting requirements for ESOP companies have been have been limited to the requirements of SOP 93-6.  FASB adopted ASU 2011-04 to develop common fair market value requirements in accordance with GAAP and IFRSs. 

Earlier today we discussed how President Obama's 2014 Budget Proposal Eliminates ESOP 404(k) Dividends for large C Corporations.  The ESOP Association Blog provides some further commentary on the proposed elimination of IRC Section 404(k) ESOP Deductible Dividends in President Obama's Budget for Fiscal Year 2014: