Can I sell stock to an ESOP in return for a note from the ESOP and still qualify for a tax-free rollover?
Yes. However, the Qualified Replacement Property must be purchased within a 15-month period, beginning 3 months prior to the date of the sale. If the note has not been fully paid by the time the Qualified Replacement Property must be purchased, the selling shareholder will have to use other funds to purchase enough Qualified Replacement Property to roll over the entire sale proceeds. Seller-financed transactions can use floating rate notes (See Question 28) to avoid this problem. Return to the top of the page.
Related Questions
- After the ESOP acquires at least 30 percent of the companys stock, will subsequent stock sales to the ESOP qualify for the tax-free rollover?
- Can I sell stock to an ESOP in return for a note from the ESOP and still qualify for a tax-free rollover?
- How do employees sell the stock they receive from the ESOP?
