DEFERRAL OF TAX FOR CERTAIN SALES OF EMPLOYER STOCK TO EMPLOYEE STOCK OWNERSHIP PLAN SPONSORED BY S CORPORATION.

SEC. 114. DEFERRAL OF TAX FOR CERTAIN SALES OF EMPLOYER STOCK TO EMPLOYEE STOCK OWNERSHIP PLAN SPONSORED BY S CORPORATION.(a) In General.—Section 1042(c)(1)(A) is amended by striking “domestic C corporation” and inserting “domestic corporation”. (b) 10 Percent Limitation on Application of Gain on Sale of S Corporation Stock.—Section 1042 is amended by adding at the end the following new subsection:“(h) Application of Section to Sale of Stock in S Corporation.—In the case of the sale of qualified securities of an S corporation, the election under subsection (a) may be made with respect to not more than 10 percent of the amount realized on such sale for purposes of determining the amount of gain not recognized and the extent to which (if at all) the amount realized on such sale exceeds the cost of qualified replacement property. The portion of adjusted basis that is properly allocable to the portion of the amount realized with respect to which the election is made under this subsection shall be taken into account for purposes of the preceding sentence.” . (c) Effective Date.—The amendments made by this section shall apply to sales after December 31, 2027.