On January 9, 2020, the Tax Court issued a Memorandum Opinion in the case of Ed Thielking Inc. v. Commissioner (T.C. Memo. 2020-5). The issue presented in Ed Thielking Inc. v. Commissioner was whether a corporate Employee Stock Ownership Plan (ESOP) and an Employee Stock Ownership Trust were qualified under IRC § 401(a) and IRC § 501(a), respectively. Background to Ed Thielking Inc. v. Commissioner The petitioner is an S corporation, incorporated in March 2006. Effective as of the date of incorporation, the petitioner established an employee stock ownership plan (ESOP), which was executed by the petitioner’s president and sole shareholder, Ed. At the same time, the petitioner established an employee stock ownership trust (ESOT), and the Ed was named trustee. Upon resolution of the petitioner’s board of directors, a dividend payable in capital stock was issued to the Ed, who elected to have the petitioner contribute the dividend to his…