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Cap Table & Financing Tax Modeling Engine

Stock Option Pool & Financing Tax Impact Simulator

Model how authorizing shares for an Employee Stock Option Plan (ESOP), converting SAFEs, or closing a venture capital round impacts Delaware Franchise Tax. Discover why unissued option shares add $0 in true statutory tax under the Assumed Par Value method.

Financing Scenarios:
Current Baseline StateBefore Action
Authorized Shares:10,000,000
Issued Shares:5,000,000
Gross Assets (Sched L Line 15d):$250,000.00
Default State Bill (Authorized Shares):$85,215.00
True Statutory Tax (Assumed Par Value):$450.00
Post-Financing / Option Pool StateProjected
Total Authorized Shares:
12,000,000(+2,000,000)
Total Issued Shares:
5,000,000
Total Gross Assets:
$250,000.00
Default State Notice (Authorized Shares):
$102,215.00(+$17,000)
True Statutory Tax (Assumed Par Value):
$450.00($0 change)
Statutory Analysis & Strategic Counsel

Authorizing unissued shares for an employee option pool (ESOP) inflates Delaware’s default state bill significantly under Authorized Shares, but causes $0 or minimal increase under the Assumed Par Value method. Ensure you file using Assumed Par Value.

The Unissued Shares Rule:Under 8 Del. C. § 503(a)(2), Delaware does not tax unissued authorized shares in your option pool if your par value is standard ($0.00001) and total gross assets are balanced. Only the Authorized Shares default method punishes option pools.

Customize Transaction Parameters

Shares created via Charter Amendment
Actually distributed (Keep 0 for unallocated pool)
Cash entering bank account
Form 1120 Sched L Line 15d

How does an option pool affect Delaware franchise tax?

Creating or enlarging an option pool usually means increasing authorized shares, and under the Authorized Shares Method each extra 10,000 authorized shares adds $85. Raising authorized shares from 10,000,000 to 12,000,000 adds $17,000, taking the bill from $85,165 to $102,165.

Under the Assumed Par Value Capital Method the same change typically costs little or nothing, because the tax depends on gross assets and issued shares as well as authorized shares.

What is an Assumed Par Value Capital Method example?

A corporation with $1,000,000 of gross assets, 8,000,000 issued shares, and 10,000,000 authorized shares has an assumed par of $0.125 per share and an assumed par value capital of $1,250,000. The tax is $400 per $1,000,000 or portion thereof, so $800.

At 12,000,000 authorized shares the assumed par value capital is $1,500,000, and the tax is still $800. Under the Authorized Shares Method the same company would owe $85,165 or $102,165.

Sources: 8 Del. C. § 503 · Delaware Division of Corporations: How to calculate franchise tax