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46 - General Principles of Financial Planning 7 Acquisition and disposition A Types (1) Liquidation of business Corporation s properties are distributed to shareholders and the corporate stock is cancelled (a) Liquidations are often an inappropriate way to sell a business, because the tax treatment is unfavorable (b) The corporation pays tax on its capital gain when it sells assets or distributes assets to shareholders (c) Shareholders are taxed on the gain equal to the difference between the fair market value of what they receive from the corporation and their basis in their stock (d) S Corporations avoid double taxation on liquidations because of the pass-through of corporate income to shareholders and the basis rule (2) Taxable sale of business (a) The vast majority of business sales are taxable (b) Stock sale results in a taxable gain to the business s selling shareholders that is equal to the difference between the selling price and their basis Sale of stock does not affect the cost basis of assets (c) Asset sale results in a taxable gain to the corporation if the selling price exceeds the corporation s basis, and the shareholders are also taxed on the capital gain when the proceeds from the sale are distributed to them in liquidation Asset sale may result in a new cost basis for assets (3) Tax-free dispositions of business (a) Stock sale will qualify if at least 80 percent of the voting power and at least 80 percent of the other stock in the seller are transferred to the acquiring organization in exchange for only voting stock in the buyer (b) Asset sale will qualify if substantially all of the seller s net assets are transferred to the acquiring organization in exchange for only voting stock in the buyer (c) Tax consequences of a tax-free sale are as follows: i There is no tax to the seller or to the selling corporation at the time of the transaction ii The seller receives stock in the acquiring corporation at a basis equal to the seller s basis in the property sold that is, a carryover basis iii The exchange is tax free, but the seller will be taxed when he or she sells the stock The gain on the sale can be avoided if the stock is held until death B Planning the taxable sale (1) Installment sales (a) A seller s gain can be spread ratably over the period during which installment payments are made (b) A buyer s interest payments are deductible (within limits) when made, and taxable to the seller when received (c) Imputed interest rules apply interest on an installment note that is regulated by a minimum rate of interest de ned in the Internal Revenue Code Imputed interest is imposed for tax purposes if an installment sale does not provide for an adequate rate of interest, and it is taxed over the installment period by a complex set of rules in sum, the sale cannot be planned to avoid the tax on interest to the seller by understating the interest at arti cially low rates.



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Makes e-learning a mandatory part of employees jobs Offers easy access to e-learning tools via the Web

Notice that they're broken down into two basic categories:

FirstName --------Melissa Lauren Lauren Jane LastName ----------Anderson Davis Davis Doe Home -----NC NC NC BA TourName ----------------------Outer Banks Lighthouses Appalachian Trail Outer Banks Lighthouses Bahamas Dive Region -----NC NC NC BA

Topic 16: Characteristics and Consequences of Property Titling - 47 (2) Private annuity (a) Payments are made for the rest of seller s life based on actuarial factors (b) Part of each annuity payment is a tax-free return of basis, part is capital gain, and part is interest similar to an installment sale but only until the seller reaches life expectancy, and the annuity factor makes the calculations somewhat different and the amount of income tax payable may be signi cantly different from that in an installment sale





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find_xx methods locate "overviews" about each of the four types of information shown in Figure 12-7 get_xx methods return full details of the overviews associated with the find_xx methods

8, sin ' ~ u ~ o = nf,

These methods were designed to target the type of querying service consumers are expected to need and to promote efficiency For example, a client wants to query a business entity for the services it provides without getting back a huge amount of detail Instead, overviews of the services are returned and the keys associated with them can be used to locate more detail if required Again, think of the search engine paradigm, where the response you get from a query simply shows the summarized (or in-context) query results To access any of the details (ie, the Web page), you have to follow the given link The Publishing API Just as the inquiry API enables UDDI querying, the publishing API enables UDDI updates This class of UDDI API functions is summarized in Table 12-2

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1 Capitalized earnings A Capitalization treats earnings and dividends as a perpetuity Preferred stock is a perpetual debt instrument Its dividends continue inde nitely because there is no maturity on preferred stock The value of preferred stock is the present value of its dividends discounted at the appropriate interest rate over an in nite period of time The value of a preferred stock is (1) Vp D k (2) Example: Assume a preferred stock pays an annual dividend of $2 per share The discount rate for comparable preferred stock is 8 percent The present value of a share is $2 $25 (a) Vp 008 (b) An investor is paying too much if the preferred stock is purchased for more than $25 per share; the stock is relatively cheap if it is trading under $25 per share

important are improvement in productivity and/or quality, preservation of scarce expertise, enhancing other systems, coping with incomplete information, and providing training.

Gets information about relationships between entities Gets a synopsis of all registered information managed by a particular individual Updates a service binding entry

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Again, the meanings and purpose of these methods are obvious In particular, we can identify the two types of methods we expected to see:

IMPROVING SHOPPING AND CHECKOUT AT RETAIL STORES. The modern shopper is often pressed for time, and most are unhappy about waiting in long lines. Using information technology, it is possible to reengineer the shopping and the checkout process. For example:

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