Which of the following is the primary benefit of employee stock ownership plans?
A) Employees have voting rights in firm decisions.
B) Firms pay distribution taxes for employees prior to retirement.
C) Firms may borrow against employee stock held in trust.
D) Employees are able to diversify their investments.

Question

Quizplus · Accepted Answer

The main reason that ESOPs are popular is that a firm gets a tax deduction equal to the fair market value of the shares it transfers to the trustee and can claim an income tax deduction for dividends paid on ESOP-owned stock. Employees are taxed when they receive a distribution from the trust, usually at retirement.

Which of the Following Is the Primary Benefit of Employee