Employee Stock Ownership Act of 1984

Employee Stock Ownership Act of 1984 - Amends the Internal Revenue Code to provide for the nonrecognition of gain on stock sold to: (1) an employee stock ownership plan; (2) a tax credit employee stock ownership plan; or (3) an eligible worker-owned cooperative, if within a specified period of time qualified replacement property is purchased by the taxpayer. Defines "qualified replacement property" as any security issued by a domestic corporation: (1) which does not have passive investment income in excess of a specified limitation; and (2) the equity capital of which does not exceed $10,000,000.

Allows an income tax deduction for cash dividends paid with respect to employer stock which is held by a tax credit employee stock ownership plan or an employee stock ownership plan which is a stock bonus plan. Extends the partial exclusion for dividends received to such amounts.

Excludes from gross income 50 percent of interest received by a bank, an insurance company, or other lender on loans used by an employee stock ownership plan to acquire employer securities.

Provides for a reduction in the capital gains tax with respect to sales of stock in employee-owned corporations. Sets forth special rules for the calculation of such reduction.

Relieves an estate of liability for payment of the estate tax to the extent that amounts of the tax are attributable to employer securities transferred to an employee stock ownership plan pursuant to a written agreement guaranteeing that the tax will be paid by the plan in an amount equal to the lesser of: (1) the amount of the tax imposed upon the acquired employer securities; or (2) the amount of the tax imposed on the gross estate reduced by the sum of allowable credits. Permits the payment of such tax in installments. Exempts such transfers from the tax on prohibited transactions.

Treats as charitable contributions eligible for a tax deduction certain contributions to an employee stock ownership plan. Specifies a qualification test for contributions to receive such treatment.

Allows certain small business corporations (subchapter S corporations) to maintain a tax credit employee stock ownership plan or an employee stock ownership plan.

Permits recaptured employee stock ownership plan investment tax credits to be used to reduce contributions to payroll based tax credit employee stock ownership plans.