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HRD-80-88 1 (1980-06-20)

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Report To The

Committee On Finance

United States Senate

    F           N     DSA..




Employer Stock Ownership Plans:

Who Benefits Most In

Closely Held Companies?


This report highlights problems in Employee
Stock Ownership Plans of closely held com-
panies which favor the company and adversely
affect participants. These problems relate to
the valuation, marketability, and votingof em-
ployer stock held by the Plans. The need for
special scrutiny of certain Plan transactions is
also discussed.

The Department of the Treasury was unable
to provide data showing the total tax impact
associated with Employee Stock Ownership
Plans, but it conservatively estimated that the
tax forgone during fiscal year 1979 was be-
tween $1.5 billion and $2.3 billion.

The Congress should amend the law, and the
Secretaries of Labor and the Treasury should
revise the regulations to assure that the Plans
are established and operated primarily for the
benefit of participants and their beneficiaries.




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                                                                    HR D-80-88
                                                                 JUNE 20, 1980

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