"Under existing law, any earnings attributable to an ESOP in an S corporation are not currently taxed. ESOPs are unique among otherwise nontaxable owners of S corporations (such as a charity) in their ability to avoid this tax, which is normally assessed at the highest marginal rate. The proposal would become effective as of the first committee action taken on it. Language in the proposal might be construed to grandfather existing ESOPs with S corporations, although it is doubtful this is the intent."  MORE >>