A key advantage of employee stock ownership plans is that the company gets a tax advantage equal to the fair market value of the shares that are transferred to the trustee and can also claim an income tax deduction for dividends paid on ESOP-owned stock.

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Employee stock ownership plans (ESOPs) offer tax advantages, including deductions for contributions to the plan and dividends paid on ESOP-owned stock, which can benefit both the company and its employees.

A Key Advantage of Employee Stock Ownership Plans Is That