Taxes and Business Strategy (MTG 264 / MGP 264)
Graduate School of Management
University of California at Davis
Professor Robert Yetman – Fall 2004
MTG 264: Mondays 12:10 – 3:00 pm, 261 AOB4
MGP 264: Mondays 6:00 – 9:00 pm, OCM 3
______________________________________________________________________________
Email: rjyetman@ucdavis.edu
Phone: (530) 752-3571
Fax: (530) 752-2924
Office: AOB IV 127
Office hours: Appointment or stop by
Materials:
1. Taxes and business strategy, 2nd edition, by Scholes, Wolfson, Erickson, Maydew and Shevlin,
hereafter SWEMS
2. Cases in Tax Strategy, 3rd edition, by Erickson.
Course objective:
This course is designed to provide you with the tools to identify and understand tax planning
opportunities. The course begins by developing a conceptual framework for analyzing tax
planning transactions and then applies these tools to various tax planning scenarios. Along the
way you will necessarily be introduced to some tax rules and regulations, but this is a
consequence of the course rather than the focus of the course.
Prerequisites:
Other than the core financial accounting class, there is no prerequisite for this class. You do not
need to have any prior knowledge of taxation.
Lecture notes:
Other than the outline in this syllabus there are no lecture notes. I expect you to read through the
assigned sections prior to coming to class, but most of the learning process will take place during
the lecture as you take notes and during the completion of the related problem sets after the
material is covered in class.
Tardiness and missed classes:
I do not take attendance. If you miss a class I expect you to get the lecture notes from a fellow
classmate. Please turn off all cell phones, beepers, and any other device whose purpose is to
make noise. If you must leave such a device on, please set it to “vibrate”. If you arrive late,
please be as quite as possible upon arrival.
Preparation for lecture:
The SWEMS book can be a tough read. The attached schedule indicates which chapters and
sections we will cover if time allows, but we will typically not cover all the material in the
assigned sections. The best way to prepare for the lecture is to read through the assigned
sections and come to class prepared to learn.
Exams:
There will be one exam. The exam is a take home, open book, open notes (closed colleague)
handed out at the end of the third class. The exam will cover the tax planning framework that is
covered in the first three weeks of the class. The exam is due at the beginning of the fourth class,
no exceptions.
Homework sets:
There will be seven problem sets assigned as noted on the class schedule. Each assignment is
due at the beginning of the following class. If you cannot attend a class it is your responsibility
to ensure that I receive your problem set by the beginning of class (i.e., by giving it to a
classmate to turn in for you or putting it in my mail box). The homework sets are to be
completed individually. Grading will be based on degree of completion as well as correctness.
Case presentations:
There will be six case presentations. You will be required to take part in presenting one case.
You will self assign into six groups by the fourth week of class. The cases will highlight a single
tax planning strategy that your group will attempt to “sell” to the class. You will present the case
in professional dress and be prepared to respond to questions from the audience. I will not ask
questions during your presentation. Your grade will be based on how technically correct your
presentation is and how well you “sell” the case to your audience. The audience will be
encouraged to ask questions about your case, but these questions will not affect your grade. You
should assume that your audience knows little about the details of your tax planning strategy, but
they do know exceedingly well the framework you learned in class. You will have only 45
minutes to present your case and respond to questions, so you need to be well polished and
efficient with your time. You may use any presentation method you wish.
Grading:
Take home exam:
Problem sets 7 points each :
Case presentation:
Participation during case:
20%
49%
21%
10%
Taxes and Business Strategy (MTG 264 / PGP 264)
Graduate School of Management
University of California at Davis
Professor Robert Yetman – Fall 2004
Tentative Course Schedule
______________________________________________________________________________
Week 1
Introduction, course outline, grading policies.
Lecture – Tax strategy framework
SWEMS chapter 2 sections 1 and 2
SWEMS chapter 3 sections 1, 2 and 3
Problem Set 1 assigned
Week 2
Lecture – Tax strategy framework
SWEMS chapter 3 (continued)
SWEMS chapter 4 sections 1, 3, and 4
Problem Set 1 due
Problem Set 2 assigned
Week 3
Lecture – Tax strategy framework
SWEMS chapter 4 (continued)
SWEMS chapter 5 all sections
SWEMS chapter 6 section 5
Take-home exam handed out
Problem Set 2 due
Week 4
Lecture – Compensation and retirement planning
SWEMS chapter 8 sections 1, 2, and 5
SWEMS chapter 9 sections 1, 2, and 6
Problem set assigned – Compensation and retirement planning
Problem set due – None
Case presentation due – None
Take-home exam due at beginning of class
Week 5
Lecture – Individual and estate tax planning
SWEMS chapter 18 sections 1 through 5
Problem set assigned – Individual and estate tax planning
Problem set due – Compensation and retirement planning
Case presentation due – Compensation and retirement planning: “Stock Options Gone Bad”
Week 6
Lecture – Corporate tax planning
SWEMS chapter 12 sections 2, 4, and 5
Problem set assigned – Corporate tax planning
Problem set due – Individual and estate tax planning
Case presentation due – Individual and estate tax planning: “Estee Lauder, Monetizing
appreciated assets without triggering taxation”, Book page 478
Week 7
Lecture – Mergers and acquisitions tax planning
SWEMS chapter 13 all sections
SWEMS chapter 14 section 1
SWEMS chapter 16 sections 1 and 2
Problem set assigned – Mergers and acquisitions tax planning
Problem set due – Corporate tax planning
Case presentation due – Corporate tax planning: “Analysis of the Tax and Financial Statement
Effects of Enron’s use of Monthly Income Preferred Stock (MIPS)”
Week 8
Lecture – Multinational tax planning
SWEMS chapter 10 sections 1 and 3
SWEMS chapter 11 sections 1, 2, and 3
Problem set assigned – Multinational tax planning
Problem set due – Mergers and acquisitions tax planning
Case presentation due – Mergers and acquisitions tax planning: “Analysis of the tax
consequences of Worldcom’s acquisition of MIC”
Week 9
Lecture – Tax evasion
Problem set assigned – None
Problem set due – Multinational tax planning
Case presentation due – Multinational tax planning: “Firm valuation effects of the expatriation of
U.S. corporations to tax-haven countries”.
Week 10
Lecture – None
Problem set assigned – None
Problem set due – None
Case presentation due – Tax evasion: “Business purpose / Profit motive: Compaq’s purchase and
sale of shell common stock”.