Investment Valuation with Tax-optimized Financing Decisions and a Tax-optimized Default Alternative

In this paper we evaluate an indivisible investment project that is carried out in a corporation under very simple premises. In particular, we discuss a one-period model with certainty, the pure domestic case and proportional tax rates. Surprisingly, the decision problem turns out to be rather complex if one has to make allowance for different taxation of the corporation and its owner. Altogether there are more than 10 cases that have to be distinguished if the firm's managers want to make a correct decision, depending on the relation of personal and corporate tax rates.

A Simple Accounting-based Valuation Model for the Debt Tax Shield

This paper describes a simple way to integrate the debt tax shield into an accounting-based valuation model. The market value of equity is determined by forecasting residual operating income, which is calculated by charging operating income for the operating assets at a required return that accounts for the tax benefit that comes from borrowing to raise cash for the operations. The model assumes that the firm maintains a deterministic financial leverage ratio, which tends to converge quickly to typical steady-state levels over time. From a practical point of view, this characteristic is of particular help, because it allows a continuing value calculation at the end of a short forecast period.

Endangering of Businesses by the German Inheritance Tax? – An Empirical Analysis

This contribution addresses the substantial tax privilege for businesses introduced by the German Inheritance Tax Act 2009. Advocates of the vast or even entire tax exemption for businesses stress the potential damage of the inheritance tax on businesses, as those often lack liquidity to meet tax liability. This submission tackles this issue empirically based on data of the German Inheritance Tax Statistics and the SOEP. The results indicate that former German inheritance tax law has not endangered transferred businesses. Hence, there is no need for the tremendous tax privilege for businesses in current German inheritance tax law. An alternative flat inheritance tax without tax privileges, which meets revenue neutrality per tax class according to current tax law, provokes in some cases relative high tax loads which might trouble businesses.

Tax-Optimal Step-Up and Imperfect Loss Offset

In the field of mergers and acquisitions, German and international tax law allow for several opportunities to step up a firm's assets, i.e., to revaluate the assets at fair market values. When a step-up is performed the taxpayer recognizes a taxable gain, but also obtains tax benefits in the form of higher future depreciation allowances associated with stepping up the tax base of the assets. This tax-planning problem is well known in taxation literature and can also be applied to firm valuation in the presence of taxation. However, the known models usually assume a perfect loss offset. If this assumption is abandoned, the depreciation allowances may lose value as they become tax effective at a later point in time, or even never if there are not enough cash flows to be offset against. This aspect is especiallyrelevant if future cash flows are assumed to be uncertain. This paper shows that a step-up may be disadvantageous or a firm overvalued if these aspects are not integrated into the basic calculus. Compared to the standard approach, assets should be stepped up only in a few cases and - under specific conditions - at a later point in time. Firm values may be considerably lower under imperfect loss offset.

The Struggle of Giving Up Personal Goals – Affective, Physiological, and Cognitive Consequences of an Action Crisis.

A critical phase in goal striving occurs when setbacks accumulate and goal disengagement becomes an issue. This critical phase is conceptualized as an action crisis and assumed to be characterized by an intrapsychic conflict in which the individual becomes torn between further goal pursuit and goal disengagement. Our theorizing converges with Klinger’s conceptualization of goal disengagement as a process, rather than a discrete event. Two longitudinal field studies tested and found support for the hypothesis that an action crisis not only compromises an individual’s psychological and physiological well-being, but also dampens the cognitive evaluation of the respective goal. In Study 3, marathon runners experiencing an action crisis in their goal of running marathons showed a stronger cortisol secretion and a lower performance in the race 2 weeks later. Results are interpreted in terms of action-phase–specific mindsets with a focus on self-regulatory processes in goal disengagement.

Ordinary Families -Extraordinary Care Giving

Children with severe emotional problems often have multiple needs that require disparate services including child welfare, juvenile justice, health, mental health, substance abuse, and mental retardation (Stroul, 1996). However, the primary care giving responsibilities for these youngsters still remain with their families. It is the family who shelters and clothes them; provides guidance, affection, recreation, nurturing; gets them to appointments with doctors and therapists and to school dayin- and-day-out, year after year (Lourie, 1995). Despite the invaluable and irreplaceable care provided by families, they are often maligned by a system which characterizes them as having their own problems and inadequacies. The purpose of this research is to learn more about the strengths of families who care for children with severe emotional disabilities (SED). This exploratory descriptive study made use of focus groups attended by parents who are caring for such children. In order to improve services to these families, it is important that we understand how the notion of strengths play out in their everyday lives. Observations are made about the care giving plan, which all families devise in the course of caring for their child with special needs. Implications for paid professionals who serve these families are offered by presenting a model for putting family care givers at the hub of the service provision wheel.

Border tax adjustments: Can energy and carbon taxes be adjusted at the border?

Will die Schweiz mit unilateralen energie- und klimapolitischen Massnahmen ambitionierte Ziele verfolgen, dann erfahren energieintensive Sektoren Nachteile im internationalen Wett- bewerb. Produktionsverlagerungen und „carbon leakage“ sind die Folgen, was nicht im Sinne der Schweizer Wirtschaft und der globalen Klimaziele ist. Mit Grenzausgleichsmassnahmen (BAM) kann die Schweiz ihre energieintensiven Betriebe nicht vor internationalen Wettbe- werbsnachteilen schützen. Weiter kommt hinzu, dass die Einführung von BAM aus rechtli- cher Sicht „riskant“ ist und bei einem Schweizer Alleingang mit hohen Vollzugshürden ge- rechnet werden muss. Für die Schweiz macht eine Einführung von BAM nur im Rahmen ei- ner grösseren Klimakoalition Sinn (bspw. zusammen mit der EU). Alternativen zu BAM sind die einfacher und autonom umsetzbaren Ausnahmeregelungen für energieintensive Betriebe oder Output-based-allocation-Systeme.

Approaching diplomatic and courtly gift-giving in Europe and Mughal India. Shared practices and cultural diversity

This article deals with courtly gift-giving practices in Europe and Mughal India from a comparative and interwoven perspective. Given the historiographical lacunae on Mughal gift-giving, the article presents preliminary observations for further research. Unlike most contributions to this volume, this article understands the notion of diversity in terms of an intercultural diversity that came to the fore in courtly contexts and in diplomatic encounters. My arguments are bifold. On the one hand, European and Mughal rulers and their envoys shared a common ground of diplomatic gift-giving practices that were shaped by an understanding of what was worthy of giving and of the symbolic power of the given objects. On the other hand, courtly gift-giving practices were embedded in different social and cultural environments in Europe and India. By looking at the notion of the ‘gift’ and the social organisation of the Mughal elite, it becomes clear that pīshkash was an idiosyncratic concept in South and Central Asian contexts and that offerings of manṣabdārs to the Mughal emperor had a different character than those of European courtiers to their rulers.