what are the tax implications of receiving phantom stock 
phantom stock payouts are generally taxed as ordinary income for the employee when received the company can typically deduct the payouts as a compensation expense however the specific tax implications depend on the structure of the plan and the jurisdiction it s essential for both the company and the employees to consult with tax professionals to understand the tax consequences of a phantom stock plan 1the bottom linephantom stock is a deferred compensation plan that provides employees with a cash payment based on the value of a specific number of hypothetical company shares it s designed to align employee incentives with company performance without granting actual stock ownership phantom stock can be structured as either full value or appreciation only plans and payouts typically have vesting periods and other criteria to meet while they are like stock options and sars phantom stock plans offer more flexibility in payouts and timing however it s essential for companies to carefully design and communicate these plans to ensure compliance with legal and tax regulations and to maximize their motivational effect on employees 