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Principles of Taxation for Business and Investment Planning, 5/e
Sally M Jones, University of Virginia
Fundamentals of Tax Planning
Taxes as Transaction Costs

Chapter 3 Objectives

After studying this chapter, you should be able to:

1. Given the marginal tax rate, compute the tax cost resulting from an income-generating transaction and the tax savings resulting from an income tax deduction.

2. Integrate tax costs and savings into net present value calculations of after-tax cash flows.

3. Identify the reasons why assumptions concerning future tax costs and savings are uncertain.

4. Explain why a business strategy that minimizes tax costs is not necessarily the optimal strategy for a firm.

5. Explain why the parties to a private market transaction should consider the tax consequences of the transaction to both parties.

6. Distinguish between an arm's-length transaction and a related party transaction.





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