As many of you know, we’ve been following Iowa Governor Terry Branstad’s ESOP initiative program since the beginning of 2012. The bill was introduced earlier this year, and mentioned in the Governor’s State of the State speech, and was finally signed in May 2012 by Governor Branstad.
You can read the full text of the law here. The section on the Iowa ESOP initiative begins on page 48.
We’ve also included the text of the bill below:
CAPITAL GAIN DEDUCTION FOR SALE TO AN IOWA ESOP
Sec. 133. Section 422.7, subsection 2I, Code Supplement 2011, is amended by adding the following new paragraph:
NEW PARAGRAPH. e, (1) To the extent not already excluded, fifty percent of the net capital gain from the sale or exchange of employer securities of an Iowa corporation to a qualified Iowa employee stock ownership plan when, upon completion of the transaction, the qualified Iowa employee stock ownership plan owns at least thirty percent of all outstanding employer securities issued by the Iowa corporation.
(2) For purposes of this paragraph:
(a) “employer securities” means the same as defined in section 409(1) of the Internal Revenue Code.
(b) *Iowa corporation” means a corporation whose commercial domicile, as defined in section 422.32, is in this state.
(c) *Qualified Iowa employee stock ownership plan” means an employee stock ownership plan, as defined in section 4975(e)(7) of the Internal Revenue code, and trust that are established by an Iowa corporation for the benefit of the employees of the corporation.
Additionally, you can read Governor Branstad’s statement on the close of the 2012 legislation session here.
Here’s what he had to say about ESOPs in his statement: “Legislation passed by this General Assembly will provide our Iowa Economic Development Authority with additional tools to help meet our administration’s ambitious goal to create 200,000 new jobs. We have made significant progress on that goal during this first year and a half and the High Quality Jobs Incentive Fund and Employee Stock Option Plan legislation will help accelerate those efforts.”
J. Michael Keeling, ESOP Association President had this to say: “We here at The ESOP Association are pleased to see this law to encourage the creation of new ESOPs in Iowa. We know what an ESOP brings to a company, to the company’s employees, and to the community where the company is located. Research has proven that ESOP companies are more productive, more profitable, and more sustainable, providing locally-controlled jobs. Obviously, Governor Branstad knows and appreciates what an ESOP company can bring to a community.”
We’ve included several posts about the Iowa bill on the blog this year. Links are below: