Which of the Following Are Not True About ESOPs

question 134

Multiple Choice

Which of the following are not true about ESOPs?

• A) An ESOP is a trust
• B) Employer contributions to an ESOP are tax deductible
• C) ESOPs can never borrow
• D) Employees participating in ESOPs are immediately vested
• E) C and D

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Definitions:

Book Income

The income reported by a corporation for financial reporting purposes, which may differ from taxable income calculated for tax purposes.

Financial Accounting Principles

Financial Accounting Principles are the rules and standards that guide the recording and reporting of financial data in financial statements.

Charitable Contributions

Financial or material donations made to non-profit organizations, which are often tax-deductible for the donor.

Subchapter S

A section of the Internal Revenue Code that allows corporations to elect a special tax status which enables them to be taxed similar to a partnership, avoiding double taxation.