CPA\u27s guide to benefit plans for small business

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Financing Internal Buyouts of Private Companies: SCIN Attractive If Valuation Issues Can Be Resolved

In planning for succession of ownership, oftentimes the owner of a private business seeks to sell the business to either family members or employees. Arranging outside financing may be difficult or costly, making internal financing attractive. Self-cancelling installment notes (SCINs) provide an opportunity to finance the transfer of ownership at a favorable interest rate and to obtain income and estate tax advantages. However, to pass muster with the Internal Revenue Service, the SCIN must include a risk premium for the cancellation feature. In this paper, we provide a mathematical model for computation of the required risk premium associated with the cancellation provision. The premium may be in the form of either an interest premium or a principal premium and the computations for both are demonstrated in this paper. Appendix A provides an example of the use of the formulas

ECONOMIC SURVIVABILITY OF MISSISSIPPI RICE FARMS: A DETERMINISTIC SIMULATION APPROACH

This study evaluates the economic survivability of rice farms in the Delta area of Mississippi. A general whole-farm simulation model, FLIPSIM V, is used to simulate the operations of representative rice farms over a 10-year period. Although farm size did not change for any of the representative farms considered, the financial structure of these farms changed considerably. Crop mix was found to cause significant differences in the economic growth and financial viability of rice farms in the region.Crop Production/Industries,

Valuation Of The Embedded Option In A Non-Cancelable Lease: Theory And Application

This paper applies a “real” option literature based model to valuing the option element of a non-cancelable lease without an early exercise provision. The model is applied to a common lease type – the closed-end automobile lease. The findings show that the value of the option inherent in an automobile lease is approximately two to six percent of the original asset cost. The analysis discusses ways in which the option value can be captured through the lease contract terms. Management decision makers can use these concepts in evaluating lease/purchase decisions

The Effect of Repeal of the Capital Gain Preference on Venture-Backed Companies

The 1986 Tax Reform Act eliminated preferential tax treatment of capital gains. Proposals to reinstate the preference suggest that risky new investment will suffer without favorable treatment of investment returns. Others have argued that capital for risky new ventures is largely supplied by tax-exempt institutions, who are expected to be indifferent to the taxation of realized gains. This study evaluates the effects of the repeal of preferential capital gains taxation on venture backed firms. The results show negative abnormal returns for sample firms following the Senate’s vote to repeal the capital gain preference. The returns were more negative for firms with a high debt-to-assets ratio, suggesting a more adverse effect for firms relying on equity finance for future capital needs. Sample firms were expected to be particularly sensitive to the tax change, and the results may not be generalizable to other forms of risky investment

Synthetic Studies: (I) Stabilized Diazocarbanions. (II) Solid Phase Imidazolides

The base-induced reactions of trimethyl-silyldiazomethane and dimethylphosphonodiazomethane with carbonyl compounds to form the homologous acetylenes are described; the reactions are generally applicable to the preparation of di-aryl acetylenes and of certain aryl alkyl acetylenes. The reaction of 1,1'-carbonyl-di-imidazol with hydroxy-carboxylic acids is discussed; imidazolide formation occurs only with substrates in which the hydroxyl function is secondary. The preparation and properties of polymer supported imidazolides are described; such compounds show lower reactivity than free imidazolides