1. Sydney has worked for WillCo for the last 20 years. She just had her 60th birthday and is thinking about retirement. WillCo sponsors an ESOP in which Sydney is a participant and has been since the plan’s inception 18 years ago. WillCo stock has increased significantly and Sydney is considering diversifying her WillCo stock in the ESOP. Which of following statements is correct?
a. Sydney cannot diversify until three years prior to retirement.
b. Sydney can diversify all of her WillCo stock because she has more than three years of service.
c. Sydney can diversify 50% of her WillCo stock.
d. Sydney can diversify 25% of her WillCo stock.
2. Which of the following statements are correct regarding qualifying for non-recognition of gain treatment upon the sale of a business interest to an ESOP? 1. The corporation establishing the ESOP must have no class of stock that is tradable on an established securities market. 2. After the transaction, the ESOP must own more than 35% of the outstanding corporate stock.
a. 1 only.
b. 2 only.
c. Both 1 and 2.
d. Neither 1 nor 2.