To qualify as having an employee profit-sharing plan, a firm must have a formal program in which payments based on profits are made to a select group of employees, usually senior management.

Question

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A firm can have an employee profit-sharing plan that includes all employees, not just senior management. The plan must be formal and payments must be based on profits, but it does not have to be limited to a select group of employees.

To Qualify as Having an Employee Profit-Sharing Plan, a Firm