‘‘(A) an amount equal to the fair market 
value of all of such securities at the time of 
transfer (determined without regard to any re-
striction other than a restriction which by its 
terms will never lapse) to the employee in lieu 
of compensation for such period, plus 
‘‘(B) an amount equal to 10 percent of the 
amount determined under subparagraph (A).’’. 
(e) NO TAX ON GAIN ON SALES OR TRANSFERS TO 
EMPLOYEE-OWNED AND EMPLOYEE–CONTROLLED COR-
PORATION TRUST.—
(1) IN GENERAL.—Part III of subchapter O of 
chapter 1 of such Code (relating to common non-
taxable exchanges) is amended by adding at the end 
the following new section: 
‘‘SEC. 1046. SALE OF SECURITIES TO EMPLOYEE-OWNED 
AND EMPLOYEE-CONTROLLED CORPORATION 
TRUST. 
‘‘(a) NONRECOGNITION OF GAIN.—If the taxpayer 
elects the application of this section, in the case of the 
sale or transfer of employer securities (as defined in sec-
tion 409(l)) to an employee-owned and employee-con-
trolled corporation trust, gain on such sale or transfer 
shall not be recognized if the requirements of subsection 
(b) are met.
‘‘(b) REQUIREMENTS.—
‘‘(1) IN GENERAL.—The requirements of this 
subsection are that—
‘‘(A) the employee-owned and employee-
controlled corporation trust acquiring such se-
curities from the taxpayer agrees—
‘‘(i) to hold such securities for the 3-
year period beginning on the date of such 
transfer or sale, and 
‘‘(ii) to notify the taxpayer upon the 
transfer of such securities before the end 
of such period, and 
‘‘(B) the taxpayer agrees to the provisions 
of subsection (b). 
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 
apply—
‘‘(A) in a case where such securities are se-
curities of an employee-owned and employee-
controlled corporation which are distributed 
within such 3-year period to an employee of 
such corporation, and 
‘‘(B) in the case of the sale or transfer of 
stock of an employee-owned and employee-con-
trolled corporation in connection with the sale 
or reorganization of such corporation, if such
sale or reorganization is approved by the em-
ployees of such corporation in a vote held on a 
1-employee 1-vote basis. 
‘‘(c) RECAPTURE OF TAX.—If, during any year with-
in the 3-year period referred to in subsection (b)(1), secu-
rities subject to subsection (a) are sold or transferred in 
a manner that does not meet the requirements of sub-
section (b), then gain on the sale or transfer described 
in subsection (a) shall be recognized for the year in which 
such requirements are not met.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part III of subchapter O of chapter 1 of 
such Code is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 1046. Sale of securities to employee-owned and employee-
controlled corporation trust.’’.
(f) CREDIT FOR TRANSFER OF STOCK FROM ESTATE 
TO
EMPLOYEE-OWNED
AND
EMPLOYEE-CONTROLLED 
CORPORATION.—
(1) IN GENERAL.—Part II of subchapter A of 
chapter 11 of such Code (relating to credits against 
tax) is amended by redesignating section 2016 as 
section 2017 and by inserting after section 2015 the 
following new section:
‘‘SEC. 2016. CREDIT FOR TRANSFER OF EMPLOYEE SECURI-
TIES FROM ESTATE TO EMPLOYEE-OWNED 
AND EMPLOYEE-CONTROLLED CORPORATION 
TRUST. 
‘‘(a) GENERAL RULE.—The tax imposed by section 
2001 shall be credited with the amount of employer securi-
ties considered to have been acquired from or to have 
passed from the decedent to an employee-owned and em-
ployee-controlled corporation trust. 
‘‘(b) LIMITATION.—Such credit may not exceed the 
tax imposed by section 2001, reduced under this part 
(other than by this section). 
‘‘(c) VALUE OF STOCK NOT READILY TRADABLE.—
No credit shall be allowed under subsection (a) in the case 
of employer securities which are not readily tradable on 
an established securities market unless the value of such 
employer securities is established by an independent ap-
praiser. For purposes of the preceding sentence, the term 
‘independent appraiser’ means any appraiser meeting re-
quirements similar to the requirements of the regulations 
prescribed under section 170(a)(1). 
‘‘(d) DEFINITIONS.—For purposes of subsection 
(a)—
‘‘(1) ACQUIRED FROM OR PASSED FROM A DE-
CEDENT.—Employer securities shall be considered to 
have been acquired from or to have passed from a
decedent if the basis of such property in the hands 
of the employee-owned and employee-controlled cor-
poration trust is determined under section 1014 by 
reference to paragraph (1), (2), (4), or (9) of sub-
section (b) of such section. 
‘‘(2) EMPLOYER SECURITIES.—The term ‘em-
ployer securities’ has the meaning given such term 
by section 409(l)), except that such term shall not 
include any security which is not voting common 
stock.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part II of subchapter A of chapter 11 of 
such Code (relating to credits against tax) is amend-
ed by striking the item relating to section 2016 and 
adding at the end the following new items:
‘‘Sec. 2016. Credit for transfer of employee securities from estate 
to employee-owned and employee-controlled cor-
poration trust. 
‘‘Sec. 2017. Recovery of taxes claimed as credit.’’.
(g) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after the date 
of the enactment of this Act. 
(2) CREDIT FOR TRANSFER OF STOCK FROM 
ESTATE TO EMPLOYEE-OWNED AND EMPLOYEE-CON-
TROLLED
CORPORATION.—The amendments made
by subsection (f) shall apply to estates of decedents 
dying after the date of the enactment of this Act. 
SEC. 4. STUDY OF GOVERNMENT POLICIES AFFECTING EM-
PLOYEE-OWNED 
AND 
EMPLOYEE-CON-
TROLLED CORPORATIONS. 
The Comptroller General of the United States shall—
(1) conduct a study of all Federal Government 
regulations and policies that might impact the cre-
ation and operation of an employee-owned and em-
ployee-controlled corporation as defined in section 
7701(a)(47) of the Internal Revenue Code of 1986, 
(2) identify those regulations and policies that 
are barriers to employee ownership and control of 
such a corporation, and 
(3) not later than one year after the date of the 
enactment of this Act, submit a report on the find-
ings of such study, together with such recommenda-
tions as the Comptroller General determines appro-
priate, to the Congress. 
SEC. 5. PRESIDENTIAL COMMISSION ON EMPLOYEE OWN-
ERSHIP. 
(a) ESTABLISHMENT.—Not later than one year after 
the date of the enactment of this Act, the President shall 
establish a commission to be known as the ‘‘Presidential
Commission on Employee Ownership’’ (hereafter in this 
section referred to as the ‘‘Commission’’). 
(b) DUTIES AND REPORT.—The Commission shall—
(1) conduct a study concerning all issues that 
affect ownership of businesses in the United States, 
with a primary focus on the issues that affect em-
ployee ownership of such businesses, and 
(2) not later than two years after the date of 
its establishment, submit a final report to the Presi-
dent and the Congress which includes the findings 
and recommendations of the Commission. 
(c) MEMBERSHIP.—The Commission shall be com-
posed of 15 members appointed by the President as fol-
lows: 
(1) Three individuals, each of whom is an em-
ployee of a corporation that has at least 50 percent 
of its voting stock in a trust for the benefit of em-
ployees and who is not an officer or senior manager 
of that corporation. 
(2) Three individuals, each of whom is an em-
ployee of a corporation that has at least 50 percent 
of its voting stock in a trust for the benefit of em-
ployees and who is an officer or senior manager of 
that corporation.
(3) Three individuals, each of whom is a pro-
fessor employed by an institution of higher learning. 
(4) Three individuals, each of whom is em-
ployed by a not-for-profit entity that has as its pri-
mary mission issues arising from employee owner-
ship of businesses. 
(5) The Secretary of Labor, or his designee, the 
Secretary of the Treasury, or his designee, and the 
Director of the Office of Management and Budget, 
or his designee. 
(d) STAFF.—The Commission shall have such num-
ber of staff as the President shall determine, except that 
such staff shall include not less than five full-time employ-
ees. 
(e) GIFTS AND BEQUESTS.—The Commission may 
accept, use, and dispose of gifts or bequests or services 
or personal property for the purpose of aiding or facili-
tating the work of the Commission. Gifts or bequests of 
money and proceeds from sales of other property received 
as gifts or bequests shall be deposited in the Treasury and 
shall be available for disbursement upon order of the Com-
mission.
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