Changes to employee stock ownership plans adopted

Senators passed a bill May 29 that creates a state definition of shareholder for purposes of employee stock ownership plans (ESOP).

Currently, individual stockholders in a qualified corporation can exclude from taxable income all extraordinary dividends paid on and the capital gain from the sale or exchange of capital stock of a corporation acquired through employment.

LB573, introduced by Omaha Sen. Burke Harr, designates an ESOP as a qualified corporation, allowing its individual shareholders to exclude dividends and capital gains from their taxable incomes.

The bill also clarifies that an ESOP should not be treated as a single shareholder, but that each participant in an ESOP constitutes a separate shareholder.

Senators passed LB573 on a 46-0 vote.