Debt Modifications: Tax Planning Options Including New 10-Year Potential Deferral

A Laboratory Investigation of Deferral Options ∗

An irreversible investment opportunity has value V governed by Brownian motion with upward drift and random expiration. Human subjects choose in continuous time when to invest. If she invests before expiration, the subject receives V −C: the final value V less a given avoidable cost C. The optimal policy is to invest when V first crosses a threshold V ∗ = (1+w∗)C, where the option premium w∗ is...

Valuing the Debt Tax Shield

Sensing and Deferral in Planning: Empirical Results

Kurt Krebsbach Computer Science Dept. University of Minnesota 4-192 EE/CSci Building 200 Union Street SE Minneapolis, MN 55455 [email protected] Duane Olawsky Math/CS Dept. Macalester College 228A Olin Hall 1600 Grand Avenue St. Paul, MN 55105 [email protected] Maria Gini Computer Science Dept. University of Minnesota 4-192 EE/CSci Building 200 Union Street SE Minneapolis, MN 55455 gini@cs...

Estimating the Tax Benefits of Debt

n 1958, Nobel Laureates Franco Modigliani and Merton Miller published their famous irrelevance theorems.1 One implication from these theorems is that ers and the U.S. government. Panel A of Figure 1 shows that if the corporate tax rate is 33.3%, the government gets one-third of the pie for an all-equity firm, and stockholders get the remaining two-thirds. But if the firm chooses to finance with...

Tax Simplification: Issues and Options

The notion that taxes should be simpler is one of the very few propositions in tax policy that generates almost universal agreement. The fundamental paradox of tax simplification is that despite this consensus, almost every year tax rules become more complex. This report, based on recent congressional testimony, examines a broad range of issues regarding tax complexity. Section II discusses the...