To amend the Internal Revenue Code of 1986 for purposes of the tax on private foundation excess business holdings to treat as outstanding any employee-owned stock purchased by a business enterprise pursuant to certain employee stock ownership retirement plans.

I 117TH CONGRESS 1ST SESSION H. R. 3152 To amend the Internal Revenue Code of 1986 for purposes of the tax on private foundation excess business holdings to treat as outstanding any employee-owned stock purchased by a business enterprise pursuant to certain employee stock ownership retirement plans. IN THE HOUSE OF REPRESENTATIVES MAY 12, 2021 Mr. KILDEE introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 for purposes of the tax on private foundation excess business holdings to treat as outstanding any employee-owned stock pur- chased by a business enterprise pursuant to certain em- ployee stock ownership retirement plans. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 00:44 Jun 12, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3152.IH H3152 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3152 IH SECTION 1. CERTAIN PURCHASES OF EMPLOYEE-OWNED 1 STOCK DISREGARDED FOR PURPOSES OF 2 FOUNDATION TAX ON EXCESS BUSINESS 3 HOLDINGS. 4 (a) IN GENERAL.—Section 4943(c)(4)(A) of the In- 5 ternal Revenue Code of 1986 is amended by adding at the 6 end the following new clause: 7 ‘‘(v) For purposes of clause (i), subpara- 8 graph (D), and paragraph (2), any voting stock 9 which— 10 ‘‘(I) is not readily tradable on an es- 11 tablished securities market, 12 ‘‘(II) is purchased by the business en- 13 terprise on or after January 1, 2005, from 14 an employee stock ownership plan (as de- 15 fined in section 4975(e)(7)) in which em- 16 ployees of such business enterprise partici- 17 pate, in connection with a distribution 18 from such plan, and 19 ‘‘(III) is held by the business enter- 20 prise as treasury stock, cancelled, or re- 21 tired, 22 shall be treated as outstanding voting stock, but 23 only to the extent so treating such stock would 24 not result in permitted holdings exceeding 49 25 percent (determined without regard to this 26 VerDate Sep 11 2014 00:44 Jun 12, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3152.IH H3152 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3152 IH clause). The preceding sentence shall not apply 1 with respect to the purchase of stock from a 2 plan during the 10-year period beginning on the 3 date the plan is established.’’. 4 (b) EFFECTIVE DATE.— 5 (1) IN GENERAL.—The amendments made by 6 this section shall apply to taxable years ending after 7 the date of the enactment of this Act and to pur- 8 chases by a business enterprise of voting stock in 9 taxable years beginning before, on, or after the date 10 of the enactment of this Act. 11 (2) SPECIAL RULE FOR GRANDFATHERED 12 FOUNDATIONS IN CASE OF DECREASE IN OWNER- 13 SHIP BY REASON OF PRE-ENACTMENT PUR- 14 CHASES.—Section 4943(c)(4)(A)(ii) of the Internal 15 Revenue Code of 1986 shall not apply with respect 16 to any decrease in the percentage of holdings in a 17 business enterprise by reason of the application of 18 section 4943(c)(4)(A)(v) of such Code (as added by 19 this section). 20 Æ VerDate Sep 11 2014 00:44 Jun 12, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6301 E:\BILLS\H3152.IH H3152 kjohnson on DSK79L0C42PROD with BILLS