A bill to amend the Internal Revenue Code of 1954 with respect to employee stock ownership plans.

Amends the Internal Revenue Code to allow an income tax deduction to an employer for any dividend paid with respect to employer securities or qualifying employer securities held by an employee stock ownership plan (ESOP) or by a tax credit ESOP, if the dividend is distributed to the employees participating in the plan.

Provides for nonrecognition of any long-term capital gain from the sale of small business stock to an ESOP or a tax credit ESOP, except to the extent that the taxpayer's sale price exceeds the cost of small business stock or small business investment company stock purchased by the taxpayer within 18 months after the date of such sale. Reduces the basis of such stock by the amount not recognized as gain.

Prescribes a three-year statute of limitations for the assessment of any deficiency attributable to gain realized by the sale of small business stock.