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Lectures: 2 sessions / week, 1.5 hours / session
Traditional finance and other business courses analyze a broad spectrum of factors affecting business decision-making but typically give little systematic consideration to the role of taxes. In contrast, traditional tax accounting courses concentrate on administrative issues while ignoring the richness of the context in which tax factors operate. The objective of the course is to bridge this gap by providing a framework for recognizing tax planning opportunities and applying basic principles of tax strategy.
The key themes in this conceptual framework are:
All Parties Effective tax planning requires the planner to consider the tax implications of a proposed transaction for all parties to the transaction. In many cases, it is differences in tax status that create tax arbitrage opportunities.
All Taxes Effective tax planning requires considering both explicit taxes (taxes paid directly to the government) and implicit taxes (taxes paid indirectly in the form of lower before-tax rates of return on tax-favored investments).
All Costs Effective tax planning requires the planner to recognize that taxes represent only one among many business costs, and all costs must be considered in the planning process.
The course begins with some basic analytical tools of this framework. The role that taxes may play in business decisions are presented within the life-cycle of a firm, from the tax issues at start up (e.g., the choice of organizational form), the compensation of workers (e.g., current and deferred compensation, stock options), investment opportunities (e.g., stocks, bonds, annuities), capital structure and dividend policy, multistate and multinational operations, financial innovations, and mergers and acquisitions.
An ultimate goal of the course is to provide you with an approach to thinking about taxes that will be valuable even as the tax laws change. A useful by-product of this approach is the ability to think critically about current tax reform proposals.
Scholes, Wolfson, Erickson, Maydew and Shevlin. Taxes and Business Strategy - A Planning Approach. 2nd ed. Prentice-Hall, 2001. (Referred to as SWEMS).
Contains cases and other materials.
Abrams, and Doernberg. Federal Corporate Taxation. 4th ed. Foundation Press, 1998. If you were taking the first course in corporate taxation in a law school this book would be your TA. It is not necessary for you to purchase this book unless you really want to delve greater into the details of the tax law.
Your grade will be based on the following weights:
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Assignments may be done in groups of two or three unless otherwise stated, and are intended to help you learn and practice the mechanics of the course material. This means the work you turn in must be your own and not copied from another. This does not mean you have to do your assignments in isolation, and you are permitted to consult with others in order to understand, or better understand, the material. Seeking and giving such assistance is encouraged. If you are unsure whether some particular form of interaction is proper under these rules please consult me and/or T.A. for clarification. Late assignments will not be accepted.
If you believe an error has been made in grading your homework or exam, you may request a regrade by doing the following: Write a brief note to the T.A. explaining why you think there is an error and submit both the note and the entire assignment to which it pertains. All regrade requests must occur within seven (7) calendar days of the day graded material is returned to the class. We reserve the right to regrade the entire contents of any submitted assignment or exam.
Professional conduct is built upon the idea of mutual respect. Such conduct entails (but is not necessarily limited to):
Attending the class. Each class benefits from the attendance and participation of all students. Your grade for participation will be affected by absences.
Arriving on time. Late arrivals are disruptive to both lectures and class discussion, and show disrespect to those who are on time.
Minimizing disruptions. All cell phones and pagers should be turned off during class. You should not leave and re-enter the class. You should avoid engaging in side conversations after class has begun.
Focusing on the class. While you may take notes on laptops, do not use laptop computers or hand-held devices for other tasks while in class. Activities such as net surfing, day trading, and answering email are very impolite and disruptive both to neighbors and the class.
Being prepared for class. You should be ready to discuss any assigned readings and to answer any assigned questions for each day's class, including being ready to open a case assigned for that day.
Respect. You should act respectfully toward all class participants.
Class participation grading reflects student adherence to these principles; students gain credit for contributing valuable insights and students lose credit if they fail to adhere to any of the above guidelines.