In determining the tax advantage of a current salary contract versus a deferred compensation contract, why is it useful to set the contractual terms so as to hold one party indifferent to the choice of the contract? Does it matter whether the employee or employer is made indifferent between the two choices?
Answer to relevant QuestionsWith the change in marginal tax rates in the TRA 86, would it have been tax disadvantageous for tax- exempt institutions such as Stanford University to establish deferred compensation arrangements in 1986 for their ...In deriving Equation comparing ISOs and NQOs, how were any stock price changes after Exercise of an ISO treated? Assume the same facts as in Exercise 5. But now you expect your tax rate on ordinary income to decline to 20% in year 3. How do your answers in Exercise 5 change? Would you make the Section 83(b) election? Evaluate the ...Suppose you hold two series of options, both NQOs. Because of a big promotion, you expect your tax rate to increase from a current 31% to 39.6%. The current stock price is $70. The first set of options, close to maturity, ...How does the Black Tepper stocks-versus-bonds puzzle pertain to pension planning? Is it still tax advantageous for corporations to hold bonds in their pension accounts subsequent to the 1986 Tax Act?
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