NEW YORK DEPARTMENT OF REVENUE VS. QUALITY MARKETS OF AMERICA

In this instructional case, Quality Markets of America (QMA), a large and successful company, is being audited by the New York State Department of Revenue over its calculation of the state 's franchise tax. QMA has historically borrowed a substantial amount of money from its subsidiaries. The s...

Full description

Saved in:
Bibliographic Details
Published in:Journal of the International Academy for Case Studies 2013-08, Vol.19 (6), p.51
Main Authors: Frasier, Charles E, Jewell, Jeffrey J, Mankin, Jeffrey A
Format: Article
Language:English
Subjects:
Accounting
Bond portfolios
Bond ratings
Capital requirements
Capital structure
Corporate debt
Debt financing
Discriminant analysis
Dividend policy
Financial management
Financial statements
Hypotheses
Influence
International banking
Portfolio management
Prices
Regulation of financial institutions
Securities markets
State taxes
Studies
Tax audits
Tax regulations
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:In this instructional case, Quality Markets of America (QMA), a large and successful company, is being audited by the New York State Department of Revenue over its calculation of the state 's franchise tax. QMA has historically borrowed a substantial amount of money from its subsidiaries. The state tax regulations indicate that undercapitalized firms must treat debt from affiliated parties, such as subsidiaries, similar to equity for the purposes of franchise tax calculations. QMA does not consider itself to be undercapitalized, while the state does - thus leading to differing interpretations on how the firm should compute its franchise tax obligations. This case explores a wide variety of issues around the franchise tax, capital adequacy, and the state 's ability to influence firms ' capital structures through the tax code and regulations. [PUBLICATION ABSTRACT]
ISSN:1078-4950
1532-5822