Most corporations, those that are called C corporations (because they are taxed under Subchapter C of the Internal Revenue Code), enjoy unique and almost legendary ESOP tax advantages that have been the driving force in the growth of ESOPs since the mid- 1980s. Employee Benefits Law Group guides its C corporation clients through these incentives and tax deduction opportunities with a view to the client feeling assured that they have prudently planned their transaction funding and benefit plans, while optimizing the tax efficiencies of their C corporation ESOP – even when compared to the alternatives available for S corporations.
We help C corporations explore all available ESOP options.
In very general terms, C corporation ESOPs allow:
In some cases, the C corporation incentives are not ideal and a transition to S corporation status is the better path. In comparison, some S corporation clients conclude that these incentives are compelling enough to revoke their subchapter S elections. It is also not unusual to take advantage of the C corporation incentives and then make the switch to S corporation status.
Objective guidance, from a trusted advisor, that fully understands the complexities of these comparisons, tax implications and sometimes trade-offs of each option is imperative. They require careful consideration to determine if they're the right combination of incentives to meet objectives; or to find alternatives, if necessary or better for the client.