This case concerns whether amounts distributed by an Employee Stock Ownership Plan (“ESOP”) to terminated participants are deductible by the corporation sponsoring the ESOP if the distributions are funded by proceeds of redemptive dividends from the corporation (i.e., payments made in exchange for shares of its stock held by the ESOP). An Eighth Circuit panel ruled that such distributions are not deductible, thereby diminishing the incentives of an employer to offer an ESOP as an employee benefit plan and creating a conflict with the Ninth Circuit’s decision in Boise Cascade v. U.S., 329 F.3d 751 (9th Cir. 2003).
On 3/26/09, the NAM joined with three other organizations in an amicus brief urging the full Eighth Circuit to review the panel decision. In our brief, we pointed out that the panel decision was premised on the Ralston Purina decision, issued after briefing was complete, and on a ground not even advanced by the federal government in either Ralston Purina or the case at hand. Under such circumstances, an appellate court should hear supplemental arguments on these issues, particularly if the court’s decision threatens to create a circuit split.
Unfortunately, on 5/6/09 the court declined to hear this appeal.