Jerk Flashcards
Why did Seagram record a deferred tax liability on its GAAP financial statements as a result of the DuPont transaction?
Bc the tax basis of the remaining DuPont shares was far less than the GAAP basis of those shares
How did Seagram account for the DuPont transaction on its GAAP statements?
As a sale
As a result of the DuPont transaction, what elements (line items) of Seagrams GAAP financial statements contained amounts that did not coincide with their corresponding economic values?
Deferred tax liability and marketable securities
What benefits did Enron’s MIPS transaction provide for Enron?
Enron’s MIPS was classified as a hybrid between debt and equity of their F/S, but as debt for tax purposes. Enron was able to deduct these payments as interest.
What was Enron’s stated business purpose with its MIPS transaction?
Stated business purpose was to improve debt ratios and reduce the cost of capital
What action did the IRS take with regard to Enron’s transaction?
The IRS decided not to challenge
What did the IRS conclude with regard to Enron’s stated business purpose?
The IRS conceded that there was a valid business purpose bc the transaction lowered Enron’s cost of capital and improved their financial statements (debt/equity ratio and EPS).
Type II
Non deductible IRA
Type IV
Taxable brokerage account
Type VI
Deductible IRA
Non deductible IRA tax rate
Ordinary
Taxable Brokerage account tax rate
Capital gains
Which investment vehicle uses the capital loss carry forward?
Taxable brokerage account
Why did the decision to make or forgo the 338(h)(10) election in the sale of snapple to Triarc have a $250mm+ after tax cash flow effect?
Not making the 338(h)(10) resulted in a $1.4bn loss rather than a gain had it been made. The taxable loss resulted in a refund of prior taxes paid.
If Quaker had spun off snapple, what would have happened to the tax basis that Quaker had in the stock of snapple?
It would have vanished
