A bill to amend the Internal Revenue Code of 1954 to provide for employee stock ownership plans, and for other purposes.

Amends the Internal Revenue Code to allow an income tax deduction for employer contributions to an employee stock ownership plan (ESOP) which owns all or substantially all of the employer's outstanding qualifying employer securities if such contributions are applied to the repayment of principal and interest on a loan incurred for the purpose of acquiring such securities. Limits the deductible amount for such contributions to 25 percent of the compensation otherwise paid or accrued to all employees under the plan for the taxable year.

Exempts such an ESOP from the limitations otherwise imposed on annual additions to an employee stock ownership plan.

Permits a tax credit ESOP which owns all or substantially all of the employer's outstanding qualifying employer securities to distribute benefits in cash although it does not permit a participant to exercise the right to demand that benefits be distributed in the form of employer securities.

Permits distributions from a tax credit ESOP of employer securities allocated to a participant's account in the case of a sale of the assets of an operating division or a sale of the stock of a subsidiary and the transfer of the participant to the employment of the acquiring entity.