What is an ESOP, in plain terms?

It's a retirement plan that invests in company stock. Employees earn shares over time—at no cost to them—and build ownership as the company grows.

Is this a co-op or nonprofit?

No. An ESOP company is a regular for-profit business. It just has a structure that lets employees share in ownership.

Do employees have to buy shares?

No. The ESOP trust holds shares on behalf of employees. They don't pay anything upfront.

Who runs the company?

Leadership runs the company. A trustee represents employee-owner interests, and a board provides oversight. It operates like any well-run business.

What is Section 1042?

A provision in the tax code that lets eligible sellers defer capital gains by reinvesting proceeds in Qualified Replacement Property.

What's Qualified Replacement Property?

Stocks, bonds, and securities of operating U.S. corporations that meet certain requirements. Your advisor can help you navigate this.

Can the tax deferral become permanent?

Potentially. With proper estate planning, the deferred gain may pass to heirs on a stepped-up basis. This requires careful planning.

Is every seller eligible for 1042?

No. It depends on how long you've held the stock, the post-sale ESOP ownership percentage, and other factors. We help evaluate eligibility early in the process.

Ownership Model

A structure that keeps good people in place

Employee ownership isn't a gimmick. It's how we align interests, retain staff, and build something durable—while potentially providing meaningful tax advantages for sellers.

The Basics

What an ESOP does

An Employee Stock Ownership Plan lets employees build ownership over time. When the company does well, they benefit.

Alignment

When people own a piece of what they're building, they care more. Simple as that.

Tax Benefits

Section 1042 can let sellers defer capital gains—sometimes permanently.

Retention

Ownership gives people a reason to stay. In home health, that matters.

Why It Works

Home health is a people business

The quality of care depends almost entirely on the people delivering it. When caregivers feel valued and invested, patients get better care. When they don't, they leave—and patients feel it.

Employee ownership creates a different dynamic. People stay longer, work harder, and take more pride in outcomes. It's not complicated—it just works.

How it plays out

Ownership creates investment

Investment drives better care

Better care improves outcomes

Strong outcomes grow value

Growing value benefits everyone

For Sellers

Section 1042 can defer capital gains

When you sell to an ESOP, you may be able to defer the tax on your gain. With proper planning, that deferral can become permanent.

Basic requirements

You've owned the stock for at least 3 years

After the sale, the ESOP owns at least 30% of the company

You reinvest the proceeds in Qualified Replacement Property

You didn't receive the stock through a qualified plan or options

This is a simplified summary. Eligibility depends on many factors. Work with qualified tax and legal advisors.

Example (illustrative)

Sale price$15,000,000

Your basis$1,000,000

Capital gain$14,000,000

Est. federal tax (~24%)*~$3,360,000

With 1042 election*Deferred

* Illustrative only. Actual rates and outcomes vary. State taxes not shown. Consult advisors.

Important Disclaimer

The information provided on this page is for general informational and illustrative purposes only. It does not constitute legal, tax, or financial advice. ESOP and Section 1042 rollover structures involve complex regulations and eligibility requirements. Individual results vary significantly based on transaction specifics, timing, and other factors. Always consult with qualified legal, tax, and financial advisors before making any decisions regarding your business or personal finances.

FAQs

Common questions

Questions about selling to an ESOP?

We can walk you through how it works and whether you might qualify for 1042 benefits.

Let's Talk