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Home > Balance Sheets Finance Library > Taxes and Business Strategy: A Planning Approach

Balance Sheets Finance Library

Taxes and Business Strategy: A Planning Approach

Myron S. Scholes, Mark A. Wolfson, Merle M. Erickson, Edward L. Maydew, and Terrence J. Shevlin (4th ed 2008, originally 1992)


Why Read It?

  • Focuses on the importance of effective tax planning in the business and investment decision-making process.

  • Presents the implications of certain taxation issues in a straightforward and understandable fashion.

  • Analyzes the main tax issues faced by investment bankers, making it an essential resource for planning tax and business strategy.

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Getting Started

Taxes and Business Strategy, now in its fourth edition, addresses contemporary tax issues and provides a clear framework for understanding how taxation influences asset prices, equilibrium returns, and the form and content of contractual agreements. It analyzes the critical issues in tax accounting, economics, and corporate strategy in a readable and practical way.

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Authors

Myron S. Scholes (b. 1941) is professor of finance emeritus at the Stanford University Graduate School of Business, and chairman of Platinum Grove Asset Management. He has previously been president of the American Finance Association, and was awarded the Nobel Memorial Prize in Economic Sciences in 1997.

Mark A. Wolfson is consulting professor at the Stanford Graduate School of Business. He is a managing partner of Oak Hill Capital Management.

Merle M. Erickson is professor of accounting at the University of Chicago Booth School of Business, and is a coeditor of the Journal of Accounting Research. He has received several awards from the American Taxation Association

Edward L. Maydew is the David E. Hoffman distinguished professor of accounting at the Kenan-Flagler Business School, University of North Carolina. He also serves as director of research for the UNC Tax Center.

Terrence J. Shevlin is professor of accounting, the Paul Pigott-PACCAR professor of business administration, and chair, Department of Accounting, at the Foster School of Business, University of Washington.

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Context

  • Provides extensive analysis of technical tax rules applied to corporate mergers and acquisitions, an explanation of accounting for income taxes, a discussion on college savings plans, and a practical evaluation of the new tax rates on dividends and capital gains.

  • Examines the pervasive impact of tax rules on the investment and financial decisions of businesses.

  • Highlights important economic issues found in a multitude of tax-related transactions.

  • Focuses more clearly on the economic consequences of alternative contractual arrangements than on the precise tax laws governing the arrangements.

  • Uses an abundance of examples that can be applied directly to situations that arise in the real world.

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Impact

  • Relevant for those in investment banking, law, private equity, and other fields where tax plays a large role in determining the outcome and structure of deals and compensation.

  • Provides a multi-perspective framework for thinking about tax issues and how taxes can impact the value of a transaction.

  • Serves as a guide for any investment banker or experienced professional wanting to develop more efficient structuring alternatives for clients.

  • Integrates an understanding of the tax laws with fundamentals of corporate finance and microeconomics.

  • Shows how accountants and economists can unify the way they think about taxation.

  • Useful as course material for studying tax strategy, investment banking, corporate finance, strategy consulting, money management, and venture capital.

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Quotations

Traditional approaches to tax planning fail to recognize that effective tax planning and tax minimization are very different things.

We view efficient tax planning as part of the larger problem of the efficient design of organizations.

From a social policy standpoint, tax rules are most controversial when they are designed to discriminate among different economic activities.

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Further reading

Books:

  • Block, Cheryl D. Corporate Taxation: Examples And Explanations. New York: Aspen Law & Business, 1998. Builds your understanding through application of hypothetical examples.
  • Karayan, John E., Charles W. Stenson, and Joseph W. Neff. Strategic Corporate Tax Planning. Hoboken, NJ: Wiley, 2002. A corporate guide to understanding the basic tax implications of everyday business.

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