Provides gross income tax exclusion for capital gains from sale of certain employer securities.
Impact
The rationale behind this bill is to stimulate the establishment of employee stock ownership plans within small businesses. By offering a tax incentive, the bill aims to motivate business owners to pass ownership to their employees rather than selling to potentially less favorable external parties. This transfer of ownership is viewed as beneficial for both employee morale and local economic stability, as it encourages businesses to remain community-centric and prevents assets from relocating to out-of-state investors.
Summary
Assembly Bill A3437 introduces a gross income tax exclusion for capital gains realized from the sale of employer securities by small, private businesses in New Jersey. This tax exclusion is applicable for businesses that employ fewer than 500 individuals and are not publicly traded. The bill specifically targets sales to employee stock ownership plans, New Jersey S corporations owned by such plans, or eligible worker-owned cooperatives. The transaction must result in these entities owning at least 30% of all outstanding employer securities to qualify for the tax exclusion.
Contention
While the bill may provide significant benefits, potential points of contention lie in its implementation and the definitions set forth for qualifying entities. Questions may arise regarding the qualifications for 'employee stock ownership plans' and the specific criteria for what constitutes local businesses versus larger entities. Furthermore, any perceived favoritism towards certain business structures, like worker-owned cooperatives, could evoke criticism from other stakeholders in the business community who feel excluded from these benefits.
Provides gross income tax exclusion for capital gains from sale of certain employer securities by qualified businesses that result in net positive benefit to State.
Provides gross income tax exclusion for capital gains from sale of certain employer securities by qualified businesses that result in net positive benefit to State.
Allows deduction from New Jersey gross income of certain capital gains from sale or exchange of New Jersey qualified small business stock held for more than five years.
Allows deduction from New Jersey gross income of certain capital gains from sale or exchange of New Jersey qualified small business stock held for more than five years.