Taxes and Business Strategy
6th Edition
Published on 10. October 2025
Book
Paperback/Softback
440 pages
978-1-61853-321-0 (ISBN)
More details
Edition
6th ed.
Language
English
Place of publication
United States
Product notice
Paperback (trade)
Unsewn / adhesive bound
Dimensions
Height: 254 mm
Width: 203 mm
Thickness: 32 mm
Weight
907 gr
ISBN-13
978-1-61853-321-0 (9781618533210)
Copyright in bibliographic data is held by Nielsen Book Services Limited or its licensors: all rights reserved.
Schweitzer Classification
Persons
Merle Erickson is Professor of Accounting at the Booth School of Business at the University of Chicago.Professor Erickson teaches "Taxes and Business Strategy" at Booth and has taught the course for more than twenty-five years. He has published numerous articles in a variety of top academic journals, and from 2005-2011, he served as a co-editor of the Journal of Accounting Research.Over the course of his career, he has consulted on complex GAAP and tax accounting issues (e.g., debt versus equity, accounting for mergers, acquisitions and divestitures [e.g., spin-offs, leveraged partnerships, reverse Morris Trust transactions]) in a variety of contexts (e.g., bankruptcy, various private equity transactions, tax receivable agreements, tax sharing agreements, shareholder disputes, partnership and LLC arrangements, and various types of tax advantaged transactions). His clients have included, among others, the U.S. Department of Justice, the Internal Revenue Service, Fortune 500 companies in various industries, international financial institutions, private equity firms, law firms, accounting firms, and individual taxpayers. He has also assisted corporations with SEC, IRS and whistleblower investigations.Prior to entering academia, he assisted the U.S. Government in its prosecution of the Lincoln Saving & Loan case. He subsequently published an academic article and teaching case relating to the audit failure associated with the Lincoln Saving & Loan case. That teaching case has been used by the Big 4 to train junior auditors.
He has been given several awards for his research and teaching. In addition to teaching graduate students at Chicago Booth, Erickson has taught courses to Morgan Stanley, Merrill Lynch, General Electric Capital Corporation, Baker McKenzie, Andersen Consulting, Accenture, CareerBuilder, and the IWI (Investments and Wealth Institute) among others. He was named one of BusinessWeek′s Outstanding Faculty at the University of Chicago. He is the faculty director of the Booth Mergers and Acquisitions course for Executives, and is the also the faculty director of the Booth Certified Private Wealth Advisor (CPWA) program.
Erickson earned a bachelor′s degree in accounting from Rockhurst College in 1987, an MBA in 1989 from Arizona State University, and a PhD in accounting from the University of Arizona in 1996. He joined the Chicago Booth faculty in 1996. In addition to his scholarly activities, Erickson is an avid fisherman. His angling pursuits have taken him from the pristine wilderness lakes of northern Canada to some of the remotest stretches of the Great Barrier Reef. He received the Angler Award from the Billfish Foundation in 2003 for catching and releasing the most striped marlin worldwide that year.
He has been given several awards for his research and teaching. In addition to teaching graduate students at Chicago Booth, Erickson has taught courses to Morgan Stanley, Merrill Lynch, General Electric Capital Corporation, Baker McKenzie, Andersen Consulting, Accenture, CareerBuilder, and the IWI (Investments and Wealth Institute) among others. He was named one of BusinessWeek′s Outstanding Faculty at the University of Chicago. He is the faculty director of the Booth Mergers and Acquisitions course for Executives, and is the also the faculty director of the Booth Certified Private Wealth Advisor (CPWA) program.
Erickson earned a bachelor′s degree in accounting from Rockhurst College in 1987, an MBA in 1989 from Arizona State University, and a PhD in accounting from the University of Arizona in 1996. He joined the Chicago Booth faculty in 1996. In addition to his scholarly activities, Erickson is an avid fisherman. His angling pursuits have taken him from the pristine wilderness lakes of northern Canada to some of the remotest stretches of the Great Barrier Reef. He received the Angler Award from the Billfish Foundation in 2003 for catching and releasing the most striped marlin worldwide that year.
Content
About the Authors
Preface
Chapter 1: Introduction to Tax Strategy
1.1 Themes of the Book
1.2 Why Do Tax Rules Influence Before-Tax Rates of Return and Investment Decisions?
1.3 Intended Audiences for this Book
Summary of Key Points
Appendix 1.1: Overview of Calculation of U.S. Income Tax Liability
Questions
Exercises
Tax-Planning Problems
References and Related Works
Chapter 2: Tax-Planning Fundamentals
2.1 Types of Income Tax Planning
2.2 Restrictions on Taxpayer Behavior
2.3 The Legislative Process and Sources of Tax Information
Summary of Key Points
Appendix 2.1: Sources of Information on Tax Legislation
Appendix 2.2: More Detailed Examples of Tax Planning
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 3: Returns on Alternative Savings Vehicles
3.1 Intertemporally Constant Tax Rates
3.2 Changes in Tax Rates Over Time
3.3 More on Pension Plans
Summary of Key Points
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 4: Implicit Taxes and Clienteles, Marginal Tax Rates, and Arbitrage
4.1 Tax-Favored Status and Implicit Taxes
4.2 Clienteles
4.3 Implicit Taxes and Corporate Tax Burdens
4.4 Marginal Tax Rates
4.5 Tax Arbitrage
4.6 Tax Planning for Low-Marginal-Tax-Rate Firms
4.7 Adaptability of the Tax Plan
4.8 Reversibility of Tax Plans
4.9 Insuring against Adverse Changes in Tax Status
4.10 Tax Planning When a Taxpayer's Marginal Tax Rate Is Strategy Dependent
Summary of Key Points
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 5: Choosing the Optimal Organizational Form
5.1 Organizational Forms for Producing Goods and Services
5.2 Computation of After-Tax Returns To Pass-Through and Non-Pass-Through Forms of Organization
5.3 Start-Up Enterprises: Decision Factors, Expectations, and Observed Data
5.4 Changing Preferences for Organizational Forms Induced by Tax-Rule Changes
5.5 Other Organizational Forms Through Which to Organize Production Activities
Summary of Key Points
Appendix 5.1: Dividend Imputation in the Corporate Form
Appendix 5.2
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 6: Corporations: Formation, Operation, Capital Structure, and Liquidation
6.1 Corporate Formation
6.2 Taxation of Corporate Operations
6.3 Possible Tax Benefits of Leverage in Firms' Capital Structures
6.4 Debt-Equity Hybrids
6.5 Taxation of Distributions and Share Repurchases
6.6 Tax Planning Using the Tax Rules for Distributions and Share Repurchases
6.7 Taxation of Liquidations
Summary of Key Points
Questions
Exercises
References and Additional Readings
Chapter 7: Nontax Costs of Tax Planning
7.1 Symmetric Uncertainty, Progressive Tax Rates, and Risk-Taking
7.2 Tax Planning in the Presence of Risk-Sharing and Hidden-Action Considerations
7.3 Tax Planning in the Presence of Hidden-Information Considerations
7.4 Tax Planning and Organizational Design
7.5 Accounting for Income Tax Basics and the Importance of Financial Accounting Outcomes in Tax Plans
Evidence About the Importance of Financial Accounting Income
Summary of Key Points
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 8: Compensation Planning
8.1 Salary Versus Deferred Compensation
8.2 Salary Versus Fringe Benefits
8.3 Cash Bonus Plans
8.4 Stock-Based Compensation Components
Summary of Key Points
Appendix 8.1: Accounting for the Tax Benefits of Employee Stock Options
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 9: Pension and Retirement Planning
9.1 Types of Pension Plans
9.2 A Comparison of Salary and Pension Compensation
9.3 Deferred Compensation Versus Pension
9.4 The Stocks-Versus-Bonds Puzzle
9.5 Does It Pay to Maintain an Overfunded Pension Plan?
9.6 Funding Post-Employment Health Care Benefits
9.7 Employee Stock-Ownership Programs
Summary of Key Points
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 10: Multinational Tax Planning
10.1 Fundamental Issues in International Tax
10.2 Increasing Pressures on Tax Systems Posed by Cross-Border Commerce
10.3 Overview of International Taxation
10.4 Base Erosion and Income Shifting Across Countries
10.5 How Taxes Affect the Location and Structure of Investments
10.6 U.S. Tax Treatment of Foreign Investors
Summary of Key Points
Questions
Exercises
References and Additional Readings
Chapter 11: Introduction to Mergers, Acquisitions, and Divestitures
11.1 Overview of Issues
11.2 Major Tax Issues Associated with Mergers, Acquisitions, and Divestitures
11.3 Nontax Issues in Mergers, Acquisitions, and Divestitures
11.4 Five Basic Methods to Acquire a Freestanding C Corporation
11.5 Four Methods to Divest a Subsidiary or Line of Business
11.6 Tax Deductibility of Goodwill and Other Intangible Assets Under Section 197
Summary of Key Points
Questions
References and Additional Readings
Chapter 12: Taxable Acquisitions of Freestanding C Corporations
12.1 Tax Consequences of Alternative Forms of Corporate Acquisitions
12.2 Comparison of Taxable Acquisition Structures
Summary of Key Points
Questions
Tax-Planning Problems
References and Additional Readings
Chapter 13: Taxable Acquisitions of S Corporations
13.1 Tax Consequences of Taxable S Corporation Acquisition Structures
13.2 Comparison of the Sale of Similar S and C Corporations
Summary of Key Points
Questions
Tax-Planning Problems
References and Additional Readings
Chapter 14: Tax-Free Acquisitions of Freestanding C Corporations
14.1 Basic Types of Tax-Free Reorganizations
14.2 Section 368 "A" Reorganization: Statutory Merger
14.3 Section 368 "B" Reorganization: Stock-For-Stock Acquisition
14.4 Section 368 "C" Reorganization: Stock-For-Assets Acquisition
14.5 Tax-Free Reorganizations Under Section 351
14.6 Limitations on Target Firm Tax Attributes
14.7 Comparison of Taxable and Tax-Free Acquisitions of Freestanding C Corporations
Summary of Key Points
Questions
Tax-Planning Problems
References and Additional Readings
Chapter 15: Tax Planning for Divestitures
15.1 Subsidiary Sales 15-2
15.2 Tax-Free Divestiture Methods
Summary of Key Points
Questions
Tax-Planning Problems
References and Additional Readings
Chapter 16: Estate and Gift Tax Planning
16.1 Fundamentals of Estate and Gift Taxation
16.2 Estate- and Gift-Planning Strategies
16.3 Monetizing Appreciated Assets Without Triggering Taxation: A Case Study
16.4 The Tax Subsidy to Charitable Giving
16.5 A Model of the Trade-Offs Between Gifting Now Versus by Bequest
Summary of Key Points
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Glossary
Index
Preface
Chapter 1: Introduction to Tax Strategy
1.1 Themes of the Book
1.2 Why Do Tax Rules Influence Before-Tax Rates of Return and Investment Decisions?
1.3 Intended Audiences for this Book
Summary of Key Points
Appendix 1.1: Overview of Calculation of U.S. Income Tax Liability
Questions
Exercises
Tax-Planning Problems
References and Related Works
Chapter 2: Tax-Planning Fundamentals
2.1 Types of Income Tax Planning
2.2 Restrictions on Taxpayer Behavior
2.3 The Legislative Process and Sources of Tax Information
Summary of Key Points
Appendix 2.1: Sources of Information on Tax Legislation
Appendix 2.2: More Detailed Examples of Tax Planning
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 3: Returns on Alternative Savings Vehicles
3.1 Intertemporally Constant Tax Rates
3.2 Changes in Tax Rates Over Time
3.3 More on Pension Plans
Summary of Key Points
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 4: Implicit Taxes and Clienteles, Marginal Tax Rates, and Arbitrage
4.1 Tax-Favored Status and Implicit Taxes
4.2 Clienteles
4.3 Implicit Taxes and Corporate Tax Burdens
4.4 Marginal Tax Rates
4.5 Tax Arbitrage
4.6 Tax Planning for Low-Marginal-Tax-Rate Firms
4.7 Adaptability of the Tax Plan
4.8 Reversibility of Tax Plans
4.9 Insuring against Adverse Changes in Tax Status
4.10 Tax Planning When a Taxpayer's Marginal Tax Rate Is Strategy Dependent
Summary of Key Points
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 5: Choosing the Optimal Organizational Form
5.1 Organizational Forms for Producing Goods and Services
5.2 Computation of After-Tax Returns To Pass-Through and Non-Pass-Through Forms of Organization
5.3 Start-Up Enterprises: Decision Factors, Expectations, and Observed Data
5.4 Changing Preferences for Organizational Forms Induced by Tax-Rule Changes
5.5 Other Organizational Forms Through Which to Organize Production Activities
Summary of Key Points
Appendix 5.1: Dividend Imputation in the Corporate Form
Appendix 5.2
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 6: Corporations: Formation, Operation, Capital Structure, and Liquidation
6.1 Corporate Formation
6.2 Taxation of Corporate Operations
6.3 Possible Tax Benefits of Leverage in Firms' Capital Structures
6.4 Debt-Equity Hybrids
6.5 Taxation of Distributions and Share Repurchases
6.6 Tax Planning Using the Tax Rules for Distributions and Share Repurchases
6.7 Taxation of Liquidations
Summary of Key Points
Questions
Exercises
References and Additional Readings
Chapter 7: Nontax Costs of Tax Planning
7.1 Symmetric Uncertainty, Progressive Tax Rates, and Risk-Taking
7.2 Tax Planning in the Presence of Risk-Sharing and Hidden-Action Considerations
7.3 Tax Planning in the Presence of Hidden-Information Considerations
7.4 Tax Planning and Organizational Design
7.5 Accounting for Income Tax Basics and the Importance of Financial Accounting Outcomes in Tax Plans
Evidence About the Importance of Financial Accounting Income
Summary of Key Points
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 8: Compensation Planning
8.1 Salary Versus Deferred Compensation
8.2 Salary Versus Fringe Benefits
8.3 Cash Bonus Plans
8.4 Stock-Based Compensation Components
Summary of Key Points
Appendix 8.1: Accounting for the Tax Benefits of Employee Stock Options
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 9: Pension and Retirement Planning
9.1 Types of Pension Plans
9.2 A Comparison of Salary and Pension Compensation
9.3 Deferred Compensation Versus Pension
9.4 The Stocks-Versus-Bonds Puzzle
9.5 Does It Pay to Maintain an Overfunded Pension Plan?
9.6 Funding Post-Employment Health Care Benefits
9.7 Employee Stock-Ownership Programs
Summary of Key Points
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Chapter 10: Multinational Tax Planning
10.1 Fundamental Issues in International Tax
10.2 Increasing Pressures on Tax Systems Posed by Cross-Border Commerce
10.3 Overview of International Taxation
10.4 Base Erosion and Income Shifting Across Countries
10.5 How Taxes Affect the Location and Structure of Investments
10.6 U.S. Tax Treatment of Foreign Investors
Summary of Key Points
Questions
Exercises
References and Additional Readings
Chapter 11: Introduction to Mergers, Acquisitions, and Divestitures
11.1 Overview of Issues
11.2 Major Tax Issues Associated with Mergers, Acquisitions, and Divestitures
11.3 Nontax Issues in Mergers, Acquisitions, and Divestitures
11.4 Five Basic Methods to Acquire a Freestanding C Corporation
11.5 Four Methods to Divest a Subsidiary or Line of Business
11.6 Tax Deductibility of Goodwill and Other Intangible Assets Under Section 197
Summary of Key Points
Questions
References and Additional Readings
Chapter 12: Taxable Acquisitions of Freestanding C Corporations
12.1 Tax Consequences of Alternative Forms of Corporate Acquisitions
12.2 Comparison of Taxable Acquisition Structures
Summary of Key Points
Questions
Tax-Planning Problems
References and Additional Readings
Chapter 13: Taxable Acquisitions of S Corporations
13.1 Tax Consequences of Taxable S Corporation Acquisition Structures
13.2 Comparison of the Sale of Similar S and C Corporations
Summary of Key Points
Questions
Tax-Planning Problems
References and Additional Readings
Chapter 14: Tax-Free Acquisitions of Freestanding C Corporations
14.1 Basic Types of Tax-Free Reorganizations
14.2 Section 368 "A" Reorganization: Statutory Merger
14.3 Section 368 "B" Reorganization: Stock-For-Stock Acquisition
14.4 Section 368 "C" Reorganization: Stock-For-Assets Acquisition
14.5 Tax-Free Reorganizations Under Section 351
14.6 Limitations on Target Firm Tax Attributes
14.7 Comparison of Taxable and Tax-Free Acquisitions of Freestanding C Corporations
Summary of Key Points
Questions
Tax-Planning Problems
References and Additional Readings
Chapter 15: Tax Planning for Divestitures
15.1 Subsidiary Sales 15-2
15.2 Tax-Free Divestiture Methods
Summary of Key Points
Questions
Tax-Planning Problems
References and Additional Readings
Chapter 16: Estate and Gift Tax Planning
16.1 Fundamentals of Estate and Gift Taxation
16.2 Estate- and Gift-Planning Strategies
16.3 Monetizing Appreciated Assets Without Triggering Taxation: A Case Study
16.4 The Tax Subsidy to Charitable Giving
16.5 A Model of the Trade-Offs Between Gifting Now Versus by Bequest
Summary of Key Points
Questions
Exercises
Tax-Planning Problems
References and Additional Readings
Glossary
Index