S. 1416 · Where this bill is now
In committee
Introduced in the Senate, Apr 10, 2025
What this bill does
In plain words · AI-written from the official summaryChanges tax rules for private foundation stock holdings
This bill adjusts how the federal government calculates taxes on private foundations that own stock in corporations. When a corporation buys back its own stock from an employee stock ownership plan (a retirement benefit where workers own company shares), the bill says that repurchased stock should count as outstanding stock for tax purposes. This lets private foundations exclude that stock when figuring out whether they owe federal excise taxes on owning too much of a company.
How it affects you
This primarily affects private foundations and the corporations they invest in. Most everyday people won't feel a direct impact, unless they work at a company with an employee stock ownership plan and a private foundation holds significant shares—in which case this could indirectly influence how the company manages its stock and taxes.
Read the official summary (Introduced in Senate, Apr 10, 2025)
Reduction of Excess Business Holding Accrual Act
This bill treats certain stock repurchased by a corporation from an employee stock ownership plan (ESOP) as outstanding voting stock for purposes of the federal excise tax imposed on a private foundation’s excess business holdings. Thus, a private foundation may exclude such stock in calculating present holdings in a corporation and liability for the excise tax. (Exceptions apply.)
As background, a federal excise tax is imposed on a private foundation that owns more than 20% of the voting stock in a corporation, reduced by the percentage of voting stock held by all disqualified persons (excess business holdings). However, a private foundation with excess business holdings on May 26, 1969 (grandfathered private foundation) may own a greater percentage of voting stock in certain circumstances.
Under the bill, stock is treated as outstanding voting stock if such stock is
• not readily tradable on an established securities market;
• repurchased from an ESOP on or after January 1, 2020; and
• held by the corporation as treasury stock, cancelled, or retired.
However, such stock is not treated as outstanding voting stock if it is repurchased within the first 10 years of establishing the ESOP or, as a result of the repurchase, the permitted holdings of the private foundation would exceed 49% of the voting stock in the corporation.
Finally, under the bill, such stock does not reduce the percentage of voting stock a grandfathered private foundation may own.
Written by AI (Claude) using only the official summary by the Congressional Research Service, the Library of Congress’s nonpartisan research staff. It can miss nuance, so check the official summary and the bill text for details.
1st SessionS. 1416
A BILL
Reduction of Excess Business Holding Accrual Act
Sponsor: Sen. Rick Scott (R-FL) · Introduced Apr 10, 2025 · Taxation · 1 version of the text
Sources: Congress.gov actions and votes · bill text from GovInfo · latest official action Apr 10, 2025: “Read twice and referred to the Committee on Finance.”