Don't sell the shares, but borrow $80,000 from Spears Brothers Investment Bank, an investment bank in New
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Question:
Don't sell the shares, but enter into a prepaid forward contract whereby Danny agrees to sell the shares to Spears Brothers Investment Bank in 5 years, in exchange for receiving $100,000 today and the remaining money at the end of the 5 years.
Danny likes the second option because it gives him more cash up front. But his tax advisor tells Danny that the first option is safer because it likely won't trigger any taxable gain. Danny comes to you for advice. Which option is better for Danny to avoid triggering taxable gain?
Related Book For
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
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