Frequently Asked Questions

Employee Ownership FAQs

Common questions about employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), and other forms of employee ownership, from the basics to technical topics.

This FAQ is written primarily for business owners, managers, and advisors involved in setting up or running an employee ownership plan. If you're an employee at an ESOP company looking to understand your own benefits and rights, see our articles on Working at an ESOP Company and The Rights of ESOP Participants.

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If an S ESOP owns less than 100% of the shares, how are synthetic deemed owned shares calculated?

The number of shares of synthetic equity as otherwise determined is reduced by multiplying that number by the percentage ownership of outstanding stock by the ESOP. This assumes the other shareholders are tax paying persons or entities. Thus, where the ESOP owns 30% of the corporation's outstanding stock, if the number of synthetic shares owned by a person without this rule would be 100, it will only be 30 shares after application of the rule.

For details on S Corporation ESOPs, see our book S Corporation ESOPs

Link to this FAQ Topic: S Corporation ESOPs