More ESOPs in the News – Marriott International ESOP
March 5, 2007

This article talks about another ESOP in the news:

“The Internal Revenue Service is auditing Marriott International's federal tax returns for fiscal 2000 through 2002 over $1 billion in deductions the hotel chain took related to its employee stock-ownership plan.” Bethesda-based Marriott said it received "notices of proposed adjustment" from the IRS on Thursday that challenged most of the federal income tax deductions related to the plan, and the government agency proposed "substantial excise taxes and penalties."

The IRS is reviewing the ESOP feature of their qualified retirement plan implemented in 2000.

"Principal and interest on the debt related to the transaction was forgiven over a 26-month period as a mechanism for funding company contributions of elective deferrals and matching contributions to the plan," according to the filing. Marriott claimed $1 billion in federal income tax deductions for the forgiven principal and interest on the debt over that period.

"The benefit related to the tax deductions was reflected in equity and did not flow through the provision for income taxes," the filing said.