Just so you can have an idea of what our discussion debate was about: In October of 2005, our bankruptcy laws were substantially changed. In particular, the new law makes it harder to file for Chapter 7 and changes the Homestead Exemption. In my case I was assigned to argue against this law such as 'What did it change; why w
Paul operates a restaurant in Cleveland. He travels to Columbus to investigate acquiring a business. He incurs expenses as follows: $1,500 for travel, $2,000 for legal advice, and $3,500 for market analysis. Based on the different tax consequences listed below, describe the circumstances that were involved in Paulâ??s investigation of the business. Paul deducts the $7,000 of expenses incurred. Paul cannot deduct any of the $7,000 of expenses incurred. Paul deducts $5,000 of the expenses incurred and amortizes the $2,000 balance over a period of 180 months. 2. Contrast the differing results obtained by using the IRS's approach and the court's approach to allocating property taxes and mortgage interest in a personal/rental situation. Which method would the taxpayer prefer and why. 3. John was the sole shareholder of Blonde, Inc. The corporation had 26 salaried employees, which included John. Several years ago Blonde began experiencing financial difficulties. As a result, john made several loans to the corporation in an attempt to continue business operations and pay employee salaries. The corporation eventually filed for bankruptcy under Chapter 7 of the bankruptcy code. Upon the final discharge of the corporation's debts, John's loans remain unpaid and were worthless. Identify the relevant tax issues for John with respect to his loans to Blonde, Inc. 4. Discuss the application of the nonbusiness bad debt provisions to an individual taxpayer.
1. Paul operates a restaurant in Cleveland. He travels to Columbus to investigate acquiring a business. He incurs expenses as follows: $1,500 for travel, $2,000 for legal advice, and $3,500 for market analysis. Based on the different tax consequences listed below, describe the circumstances that were involved in Paulâ??s invest
Given the following information, calculate the market value of E Corporation, D Corporation, and the present value of the tax shield to D Corporation if both companies have a tax rate of 40%. Assume there are no agency costs or financial distress and that the expected growth of EBIT is zero. E Corporation: cost of equi
Because of a massive natural disaster, Jones Company, one of our company's largest clients, suddenly and unexpectedly became bankrupt. The amount due to us from Jones Company is no longer collectible and represents 30% of our total A/R, an amount that is considerably greater then we estimated we would write off during this accou
Repo Rate, bid-ask quotes, position to market, basis point change, bond yields, step-up note and basis spread problems included.
A- A Treasury bond dealer finances a bond purchase by selling $1,000,000 worth of Treasuries to a bank for $999,851.39, promising to repurchase the bonds the following day for the face amount. What is the implied repo rate (bank discount basis of 360 days) on this transaction? a. 5.24% b. 5.42% c. 5.50% d. 5.67% B- You a
Many of the small "dot-com" companies got financing in the form of an instrument called convertible debt. This is like ordinary debt, in that it pays a regular interest amount. But debt-holders have the right to convert it to equity. Why do you think these companies chose this instrument? Do you think it was a good idea? Reme
You have received two job offers. Firm A offers to pay you $85000 per year fro two years. Firm B offers to pay you $90000 for two years. Both jobs are equivalent. Suppose that Firm A contract is certain, but B has a 50% chance of being bankrupt at the end of the year. In that event, it will cancel your contract and pay you lowest amount possible for you to not quit. If you did quit, you expect that you could find a new job paying $85000 per , but you would be unemployed for 3 months while you search for it. a) Say you took the job at Firm B, what is the least Firm B can pay you next year in order to match what you would earn if you quit? b) Given your answer to part B, and assuming your cost of capital is 5%, which offers pays you a higher present value of your expected wage? c) Based on this example, discuss one reason why firms with a higher risk of bankruptcy may need to offer higher wages to attract employees.
You have received two job offers. Firm A offers to pay you $85000 per year fro two years. Firm B offers to pay you $90000 for two years. Both jobs are equivalent. Suppose that Firm A contract is certain, but B has a 50% chance of being bankrupt at the end of the year. In that event, it will cancel your contract and pay you lowes
1.Discuss types and sources of corporate debt and bond covenants. 2.Discuss the pros and cons of debt financing. Provide examples. 3.Discuss factors that influence the firm's choice of capital structure. Describe how taxes affect the choice of debt versus equity. 4.Explain what is meant by "indirect costs of financial dist
Acme Storage has a market capitalization of $100 million and debt outstanding of $40 million. Acme plans to maintain this same debt-equity ratio in the future. The firm pays an interest rate of 7.5% on its debt and has a corporate tax rate of 35%. A) If Acme's free cash flow is expected to be $7 million next year and is expe
Define fuel hedging. Explain how it is helpful to the airline industry.
Visit the IRS's bankruptcy site at http://www.irs.gov/compliance/enforcement/article/0, id=117520,00.html and answer the following questions: a. What percentage of bankruptcy petitions does the IRS estimate contain some kind of fraud? b. What are the major goals of the Criminal Investigation Division's bankruptcy fraud pr
Distinguish between ethical and unethical behavior in a bankruptcy setting. Mention the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 in your response.
Research on the American Auto Industry, issues relating to survival and current status on product, management, government intervention.
Research on the American Auto Industry, issues relating to survival and current status on product, management, government intervention. - Brief history - Current trends (financial strength, international competition, labor, etc.) - Pick one American auto maker and discuss products/financial condition, via web site review -
A) What are bankruptcy costs and what costs does it not take into consideration? B) A company can suffer from increased expenses if it experiences financial difficulties even though it does not go bankrupt. Why? Please fully elaborate on definitions and explanations.
Do you believe that the laws should be changed to make it easier for the entrepreneurs to go into, and recover from bankruptcy? Why or why not? What are the implications of your answer for the entrepreneurs, creditors, and the national economy?
The balance sheet of Company X is as follows: In millions of USD: Assets Working capital 20 Investments 10 Total 30 Liabilities 1-year loan 25 Equity 5 Total 30 Which party (shareholders or debtors) wins if Company X: a.) Distributes $10 million in dividends. b.) Shuts down and sells its possessions. From worki
Continental Airlines once filed for bankruptcy, at least in part, as a means of reducing labor costs. Whether this move was ethical or proper was hotly debated. Give both sides of the argument.
Williams Manufacturing Company is in Chapter 7 of bankruptcy, and it is to be liquidated. Sale of its fixed assets which are pledged as collateral to the mortgage bondholders produced $300,000, while its current assets produced $150,000. Trustee's costs (which are not recorded on the company's balance sheet) were $40,000. No sin
Project Paper Topic: Professional Ethics in Budgeting Subtopic: Ethics has recently become a hot topic in the business world. Ethical dilemmas arise on regular basis. Use external resources to find an example of ethical dilemmas or challenges regarding budgeting. Feel free to expand or focus on a particular issue deal
Review the General Motors bankruptcy that occurred during 2009. What type of bankruptcy was it (what Chapter) and what kinds of decisions went into the bankruptcy declaration?
Review the General Motors bankruptcy that occurred during 2009. What type of bankruptcy was it (what Chapter) and what kinds of decisions went into the bankruptcy declaration? How did the creditors of GM and workers and related businesses at GM fare in the bankruptcy process? What do you think were the positives and negatives of
Read the following scenario about Mary. Based upon the information in the text and your own online research, discuss Mary's ethical options. What do you think that she should do? Mary recently graduated from college and landed her first corporate job. She works as an administrative assistant for an international corporation t
See the attached file(s). Individual: Bankruptcy a) Problem 30.3 (p. 56): Propose a distribution of assets consistent with the absolute priority rule. b) Problem 30.4 (p. 56): Propose a distribution of assets consistent with the absolute priority rule. c) Delphi Corporation Assignment i) Delphi, an automobile suppl
Does the risk of bankruptcy represent a disadvantage to using debt? Research and discuss a bankruptcy case of a firm that can overcome its difficult situation.
1. The US funds it deficit spending through the sale of government debt such as Treasury Bonds. China has now become the largest creditor of the United States as it now holds a little less than $1 Trillion of US Government Debt. What are the risks and rewards to purchasing foreign securities? And if there are indeed big rewards
The Salad Oil Storage Company (SOS) has financed a large part of its facilities with long-term debt. There is a significant risk of default, but the company is not on the ropes yet. Explain a. why SOS stockholders could lose by investing in a positive-NPV project financed by an equity issue. b. why SOS stockholders coul
Crenshaw Properties was a real estate developer that specialized in self-storage facilities that it sold to limited partner investors. Crenshawâ??s role was to identify projects, serve as general partner with a small investment, and raise capital from pension funds. Crenshaw had an extensive network of people who marketed these
Subprime Crisis: A proposal in which you cite at least three recent, high quality scholarly finance or economics journal references that you expect to use.
Do you believe that the laws should be changed to make it easier for the entrepreneurs to go into, and recover from bankruptcy? Why or why not? What are the implication of your answer for the entrepreneurs, creditors, and the national economy?
Just need help with questions 3, and 4. Delta Airlines Rises from the Ashes. On April 30, 2007, Delta Airlines (Delta) emerged from bankruptcy leaner but still an independent carrier after a 19-month reorganization, during which it successfully fought off a $10 billion hostile takeover attempt by US airways. The challeng
Bankruptcy is used as a method to reformulate an individual's or an organizations financial position. A most common mistake in organizations and in one's personal life is their consistence in overextending his/her individual assets and financial resources. During the current recession in the United States, small businesses and some corporations were forced to file bankruptcy, for a plethora of different reasons mostly resulting in an organizations inability to generate an adequate return on their investment (ROI), thus causing the organization to shut the doors of their operation. Nevertheless, the bankruptcy advantage allows an organization to continue operations as long as the organization are compliant within the regulations surrounding the bankruptcy requirments. There are significant advantages to filing bankruptcy which include: ? Reorganizing your financial position. ? Obtaining a second chance at financing. ? Re-establish credit ? Ability to pay off creditors without the negative ramifications of delinquency accounts that appear on your credit report. ? Ability to keep possession of property regardless of what is owed to the creditor.
Bankruptcy is used as a method to reformulate an individual's or an organizations financial position. A most common mistake in organizations and in one's personal life is their consistence in overextending his/her individual assets and financial resources. During the current recession in the United States, small businesses and