S corp can’t deduct accrued expenses attributable to employee stock ownership plan (ESOP) participants until paid. The U.S. Tax Court, in a case of first impression, has ruled that the entity holding stock of an S corporation for the benefit of participants in the S corp’s ESOP was a trust for purposes of the tax code. Thus, the stock was deemed to be held by the trust’s beneficiaries (the ESOP participants). The participants and the S corporation were deemed “related,” so the business was required to defer certain deductions. (148 TC No. 22)