Summary
There are some S Corporations seeking to attain 100 percent ESOP status, either through a one-time sale or incrementally, in order to take advantage of the tremendous benefit it affords. With all the stock of the company owned by the ESOP, the company no longer needs to make tax distributions and the additional cash flow can enable greater capital investment in new products or facilities. It can allow a company to become more competitive on price in order to gain market share in their industry or perhaps be used for acquisitions. The possibilities are endless. When structured and maintained properly, the 100 percent ESOP-owned S Corporation can be a powerful force of employee ownership.
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