Bill Text: NJ S3112 | 2018-2019 | Regular Session | Introduced
Bill Title: Provides gross income tax exclusion for capital gains from sale of certain employer securities.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2018-10-18 - Introduced in the Senate, Referred to Senate Budget and Appropriations Committee [S3112 Detail]
Download: New_Jersey-2018-S3112-Introduced.html
Sponsored by:
Senator TROY SINGLETON
District 7 (Burlington)
SYNOPSIS
Provides gross income tax exclusion for capital gains from sale of certain employer securities.
CURRENT VERSION OF TEXT
As introduced.
An Act providing a gross income tax exclusion for capital gains from the sale of certain employer securities, supplementing chapter 6 of Title 54A of the New Jersey Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. Gross income shall not include net gains or income from the sale or exchange of employer securities of a qualified business with fewer than 500 employees that is not publically traded on any stock exchange to an employee stock ownership plan, a New Jersey S corporation owned by an employee stock ownership plan, or an eligible worker-owned cooperative, benefiting employees of the qualified business in this State if upon completion of the transaction the employee stock ownership plan, New Jersey S corporation owned by an employee stock ownership plan, or eligible worker-owned cooperative plan owns at least 30 percent of all outstanding employer securities issued by the qualified business.
b. As used in this section:
"Eligible worker-owned cooperative" means an "eligible worker-owned cooperative" as defined by paragraph (2) of subsection (c) of section 1042 of the federal Internal Revenue Code (26 U.S.C. s.1042).
"Employee stock ownership plan" means an "employee stock ownership plan" as defined by paragraph (7) of subsection (e) of section 4975 of the federal Internal Revenue Code (26 U.S.C. s.4975).
"Employer securities" means "employer securities" as defined by subsection (l) of section 409 of the federal Internal Revenue Code (26 U.S.C. s.409).
"Qualified business" means a private entity, whose headquarters or base of operations is in this State, including but not limited to a corporation, an S corporation, limited liability company, partnership, limited liability partnership, a sole proprietorship, and all private entities related by common ownership or control.
2. This act shall take effect immediately and apply to taxable years beginning on or after January 1 next following the date of enactment.
STATEMENT
This bill provides a gross income tax exclusion for certain capital gains from the sale of employer securities of a non-publically traded business with fewer than 500 employees, whose headquarters or base of operations is in this State, to an employee stock ownership plan, a New Jersey S corporation owned by an employee stock ownership plan, or an eligible worker-owned cooperative, benefiting employees of the business in this State, if upon completion of the transaction the employee stock ownership plan, New Jersey S corporation owned by an employee stock ownership plan, or eligible worker-owned cooperative plan owns at least 30 percent of all outstanding employer securities issued by the business.
The purpose of this bill is to incentivize small businesses to establish employee stock ownership plans. An employee stock ownership plan allows companies to share ownership with employees without requiring employees to invest their own money. In addition, this bill encourages small business owners to sell their businesses to the very employees that contributed to their success. This will help to ensure that local businesses are not sold to out-of-state buyers, which is often detrimental to the fabric of local communities.
