Dear Clients and Friends: Employee stock ownership plans (ESOPs) are gaining popularity as a vehicle to motivate employees while providing tax benefits to the company and an exit strategy for its shareholders. An ESOP is a qualified defined contribution plan that invests primarily in employer securities. An ESOP gives employees the opportunity to share in productivity through appreciation of the employer stock held in their accounts, and so encourage job performance. An ESOP offers differing benefits to both S corporation and C corporation companies and their shareholders. S corporation benefits: An S corporation can transfer corporate stock to an ESOP
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