Tax Considerations Section 409(p) (continued)
{"Image DocumentName": "Tax Considerations Section 409(p) (continued)", "Image ImageDescription": "Defining the Key Terms: Synthetic Equity. Pro-rata rule: If ESOP owns less than 100% of the S-Corp, shares of synthetic equity = percentage owned by ESOP. Synthetic Equity Example : ESOP owns 35% of S-Corp shares with a FMV of  100. CEO has option to purchase 100 shares. CEO entitled to  100,000 in 10 years under nonqualified deferred compensation plan. The present value is  60,000 using 5% discount rate. Value of synthetic equity is 600 shares ( 60,000 /  100). CEO is considered owning 245 shares as synthetic equity (( ) 35%).", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}