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Full-Text Articles in Law
Frictions And Tax-Motivated Hedging: An Empirical Exploration Of Publicly-Traded Exchangeable Securities, William M. Gentry, David M. Schizer
Frictions And Tax-Motivated Hedging: An Empirical Exploration Of Publicly-Traded Exchangeable Securities, William M. Gentry, David M. Schizer
Faculty Scholarship
As financial engineering becomes more sophisticated, taxing income from capital becomes increasingly difficult. We offer the first empirical study of a high profile strategy known as "taxfree hedging," which offers economic benefits of a sale without tnggering tax. We explore nontax costs that taxpayers face when hedging by issuing so-called "DECS," "PHONES," and other publicly-traded exchangeable securities. Focusing on 61 transactions between 1993 and 2001, we shed light on why taxpayers might prefer to hedge through private "over-the-counter" transactions: An offering of exchangeable securities is announced in advance and implemented all at once, triggering an almost 4 percent decline in …
The Truth About Tax Reform, Michael J. Graetz
The Truth About Tax Reform, Michael J. Graetz
Faculty Scholarship
The Tax Reform Act of 1986 has been widely heralded as the most important tax legislation since the income tax was converted to a tax on the masses during the Second World War. Since his favorite proposal for a constitutional amendment – the one calling for a balanced budget – was not adopted, the 1986 Tax Reform Act clearly will be the major domestic achievement of Ronald Reagan's presidency. This law even produced the new Internal Revenue Code of 1986; no more Internal Revenue Code of 1954, as amended. It took until the very end of 1987 until we were …