Underwriter charges Corporation $100,000 for its services in marketing $1,000,000 of Corporations bonds (or alternatively 1,000 shares

Question:

Underwriter charges Corporation $100,000 for its services in marketing $1,000,000 of Corporation’s bonds (or alternatively 1,000 shares of Corporation’s stock). Should the underwriting fee be subject to VAT? Any special problems? How would you handle “bought deals” and “swaps” where underwriting costs are built into the transaction price?

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