Company Affairs (CS) Question:

A portion of company profits allocated by an employer, in good years, to an employee’s trust.
Contributions on behalf of each employee are expressed as a percentage of salary with 5% being common practice. If the profit-sharing plan is a qualified plan according to the IRS, employer contributions are tax deductible as a business expense. These contributions are not currently taxable to the employee; benefits are taxed at the time of distribution.