Can I sell stock to an ESOP in return for a note from the ESOP...
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Can I sell stock to an ESOP in return for a note from the ESOP and still qualify for a tax-free rollover?

Home » ESOP Knowledge Center » ESOP Tax Rules » Can I sell stock to an ESOP in return for a note from the ESOP and still qualify for a tax-free rollover?

Yes. However, the Qualified Replacement Property must be purchased within a 15-month period, beginning 3 months prior to the date of the sale. If the note has not been fully paid by the time the Qualified Replacement Property must be purchased, the selling shareholder will have to use other funds to purchase enough Qualified Replacement Property to roll over the entire sale proceeds. Seller-financed transactions can use floating rate notes to avoid this problem.

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