• Title, Summary, Keyword: Capital Gains

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The Economic Effects of Tax Incentives for Housing Owners: An Overview and Policy Implications (주택소유자(住宅所有者)에 대한 조세감면(租稅減免)의 경제적(經濟的) 효과(效果) : 기존연구(旣存硏究)의 개관(槪觀) 및 정책시사점(政策示唆點))

  • Kim, Myong-sook
    • KDI Journal of Economic Policy
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    • v.12 no.2
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    • pp.135-149
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    • 1990
  • Housing owners in Korea have a variety of tax advantages such as income tax exemption for the imputed rent of owner-occupied housing, exemption from the capital gains tax and deduction of the estate tax for one-house households. These tax reliefs for housing owners not only conflict with the principle of horizontal and vertical equity, but also lead to resource misallocation by distorting the housing market, and thus bring about regressive distribution effects. Particularly in the case of Korea with its imperfect capital market, these measures exacerbate the inter-class inequality of housing ownership as well as inequalities in wealth, by causing the affluent to demand needlessly large housing, while the poor and young experience difficulties in purchasing residential properties. Therefore, the Korean tax system must be altered as follows in order to disadvantage owner-occupiers, especially those owners of luxury housing. These alterations will promote housing-ownership, tax burden equity, efficiency of resource allocation, as well as the desirable distribution of income. First, income tax deductions for the rent payments of tenants are recommended. Ideally, the way of recovering the fiscal equivalence between the owner-occupiers and tenants is to levy an income tax on the former's imputed rents, and if necessary to give them tax credits. This, however, would be very difficult from a practical viewpoint, because the general public may perceive the concept of "imputed rent" as cumbersome. Computing the imputed rent also entails administrative costs, rendering quite reasonable, the continued exemption of imputed rent from taxation with the simultaneous deduction in the income tax for tenants. This would further enhance the administrative efficiency of income tax collection by easing assessment of the landlord's income. Second, a capital gains tax should be levied on the one-house household, except with the postponement of payments in the case that the seller purchases higher priced property. Exemption of the capital gains tax for the one-house household favors those who have more expensive housing, providing an incentive to the rich to hold even larger residences, and to the constructors to build more luxurious housing to meet the demand. So it is not desirable to sustain the current one-house household exemption while merely supplementing it with fastidious measures. Rather, the rule must be abolished completely with the concurrent reform of the deduction system and lowering of the tax rate, measures which the author believes will help optimize the capital gains tax incidence. Finally, discontinuation of the housing exemption for the heir is suggested. Consequent increases in the tax burden of the middle class could be mitigated by a reduction in the rate. This applies to the following specific exemptions as well, namely, for farm lands, meadows, woods, business fields-to foster horizontal equity, while denying speculation on land that leads to a loss in allocative efficiency. Moreover, imperfections in the Korean capital market have disallowed the provision of long term credit for housing seekers. Remedying these problems is essential to the promotion of greater housing ownership by the low and middle income classes. It is also certain that a government subsidy be focused on the poorest of the poor who cannot afford even to think of owning a housing.

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Conceptual Framework and Evaluation of Current Cost Accounting (현행원가회계의 개념구조와 평가)

  • 이정록
    • Journal of the Korea Society of Computer and Information
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    • v.3 no.2
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    • pp.229-238
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    • 1998
  • Current cost income is composed of current operating profit and holding gains. There is two viewpoints about the nature of current cost changes: earnings and capital adjustments. The former is based on the financial capital maintenance concept, while the latter is based on the physical capital maintenance concept. Proponents of current cost accounting are convinced that it provides more useful information than conventional accounting. Advocates of financial capital believe that current cost information is needed for management to evaluate their past decisions, and thereby be able to improve their decision-making ability. Defenders of historical cost point out that current cost accounting violates the traditional revenue recognition principle by recognising increases in the value of assets before sales.

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Does Tax Really Matter in Planning the Dongbu Group's Spin-Offs? (세무계획측면에서 분석한 동부그룹 물적분할)

  • Jun, Byung Wook;Cho, Hyeong Tae
    • The Journal of Small Business Innovation
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    • v.20 no.1
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    • pp.1-18
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    • 2017
  • This study examined whether divided and spun-off companies design and execute spin-offs to minimize tax burdens by analyzing multiple spin-off transactions in the Dongbu Group, when the Korean tax law regarding corporate restructuring was amended in July 2010. Before the July 2010 tax amendment, taxes on the capital gains arising from the qualifying spin-off were deferred to the earlier of the shares in or assets acquired by the spun-off company are disposed. This tax treatment relieves the divided company's tax burden by deferring taxes on capital gains, compared with non-qualifying spin-offs. However, if shares in or assets acquired by the spun-off company are disposed after the July 2010 tax amendment, the capital gain incurred at the time of the qualifying spin-off would be taxed again at the spun-off company, in addition to a taxation on the divided company's capital gains. This creates double taxation implications for the parties involved in the spin-off. As a result, the double taxation may outweigh the benefit from the tax deferral on the qualifying spin-off, which may make a qualifying spin-off tax unfavorable. Among the four spin-off cases in the Dongbu Group addressed in this study, a spin-off occurred before the tax amendment, whereas three spin-offs occurred after the tax amendment. Initially, we expected that the spin-off before the tax amendment would be a qualifying spin-off, and the other three spin-offs would be non-qualifying spin-offs, considering the taxation rules before and after the July 2010 tax amendment. However, based on the review of summarized balance sheets disclosed in the spin-offs' corporate filings, no capital gains arose during the four spin-offs that occurred in the Dongbu Group. Therefore, we concluded that the Dongbu Group considered non-tax factors more than tax factors while designing and executing the spin-offs. The local media posited during this period that these spin-offs may intend to resolve financial issues in the Dongbu Group, and this analysis was supported by the fact that some shares in the new spun-off companies were sold by the Dongbu Group. Our case studies provide evidence that all costs, including both tax and non-tax costs, must be considered in the course of spin-offs, in addition to the tax burdens on all parties involved in the corporate restructuring, which parallels the work of Scholes et al. (2008). This study provides implications that various aspects should be considered and reviewed in advance when the management makes decisions for effective tax planning.

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A cash management model with capital gains taxation-two assets certainty model

  • Phang, Sukhyun
    • Journal of the Korean Operations Research and Management Science Society
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    • v.4 no.1
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    • pp.33-39
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    • 1979
  • The cash management problem as a part of working capital management has been extensively studied. By and large the articles surveyed lacked consideration of long-term assets and the proper tax treatment of them. Recognizing that investment activities - long-term as well as short-term generate cash inflows, leads one to conclude that these investments should be included in the cash management problem. The liquidity of long term investments is an integral part of the cash management problem. This paper formulated a cash management model which incorporate the effect of long term investments and their liquidity on cash holdings. Although all of the models formulated could be solved using mathematical programing techniques, the mere size of the problem in terms of the number of variables and constraints leads one to seek other methods. For this reason rules were developed using the Kuhn-Tucker conditions thereby substaintially avoiding the programming calculations or at least easing them significantly.

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Tax Incentives for Agricultural Corporations (농업법인에 대한 조세지원제도)

  • Kim, Yong Min
    • Agribusiness and Information Management
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    • v.2 no.1
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    • pp.77-85
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    • 2010
  • Agricultural corporations have been introduced to increase the productivity of farming via entrepreneurial farm management. There are two main subgroups of agricultural corporations. One is composed of farming association corporations and the other consists of agricultural corporation companies. Major tax incentives for agricultural corporations are as follows: 1. Exemption of corporate income tax. 2. Exemption of capital gains tax for farmland investment. 3. Reduction and exemption of dividend income tax for investors.

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The Differential Effects of Cash Dividend and Stock Dividends on the Firm Valuation (현금배당정보와 주식배당정보가 기업가치평가에 미치는 차별적 영향 -배당세 영향을 중심으로-)

  • 유성용;김동출
    • The Journal of Information Technology
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    • v.4 no.3
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    • pp.19-34
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    • 2001
  • The purpose of this study is to examine the differential influences of cash dividends and stock dividends on the firm valuation. Cash dividends are firm's cash outflows but stock dividends are not. If individual investors recognize that dividend revenues are taxed. they will value paid-in capital and retained earnings differently. The results from testing the hypotheses indicate that individual investors value cash dividends after dividend taxes but do not value stock dividends after dividend taxes. This suggests that non-taxing of capital gains provides tax shelters to individual investors and investors prefer retained earnings to be converted as paid-in capital rather than 0 be paid as cash dividends.

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An Incomplete Information Structure and An Intertemporal General Equilibrium Model of Asset Pricing With Taxes (일반균형하(一般均衡下)의 자본자산(資本資産)의 가격결정(價格決定))

  • Rhee, Il-King
    • The Korean Journal of Financial Management
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    • v.8 no.2
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    • pp.165-208
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    • 1991
  • This paper develops an intertemporal general equilibrium model of asset pricing with taxes under the noisy and the incomplete information structure and examines theoretically the stochastic behavior of general equilibrium asset prices in a one-good, production, and exchange economy in continuous time markets. The important features of the model are its integration of real and financial markets and the analysis of the effects of differential tax rates between ordinary income and capital gains. The model developed here can provide answers to a wide variety of questions about stochastic structure of asset prices and the effect of tax on them.

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Study on the Relationship between Capital Structure and Earning Management in the Korean Shipping Companies (해운기업의 자본구조와 이익조정 간의 관계에 관한 연구)

  • Lee, Sung-Yhun;Ahn, Ki-Myung
    • Journal of Navigation and Port Research
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    • v.41 no.4
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    • pp.235-242
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    • 2017
  • Earnings management is defined as an intentional act during the financial reporting process or a manager's choice of accounting policies to avoid earnings decreases or obtain some private gains. Shipping firms have a highly debt-intensive capital structure and a significant motivation in earnings management to avoid failure of a Debt Covenant. From this point of views, this paper tries to determine the relationship between the capital structure and discretionary accruals estimated using the re-modified Jones model (1995). The sample used to test the research models is made up of 87 Korean shipping firms during the period from 2007 to 2015. A histogram analysis, t-test and FGLS confirm the possibility of using earnings management, and it proved that Korean shipping firms manage their earnings to avoid financial loss. An analysis of the relationship between the capital structure and earning managements, shows it is difficult to support the Debt Covenant, shown as a negative relationship between the debt ratio and debt maturity as shipping firms' capital structure and discretionary accruals as earning management variable. An additional analysis presents a negative relationship between previous debt maturity and discretionary accruals, and the possibility of earning management in a highly increased debt ration group.

The Efficiency and Equity Analysis of Cordon Pricing in the Capital Region (흔잡통행료 부과방안의 효율성과 형평성 분석(수도권을 대상으로))

  • Jo, Eun-Gyeong;Kim, Seong-Su
    • Journal of Korean Society of Transportation
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    • v.25 no.1
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    • pp.7-21
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    • 2007
  • The purpose of this study is to examine the transportation, equity and efficiency impacts of cordon pricing schemes in the Seoul Capital Region of Korea. Autos would be required to pay a toll of 2.000 Won each time they enter cordons around the CBD or the subcenters during morning peak periods. The imposition of the toll would produce a substantial decrease in traffic volumes within the cordons as well as throughout the Capital Region. The lower the income level of commuters is, the more the share of auto decreases and that of transit increases. For equity impacts, the welfare of commuters would increase or decrease according to the cordon pricing schemes but would produce progressive impacts irrespective of the schemes. However, the commuters who have the highest value of time would experience welfare gains and it would result in regressive impacts. The schemes would result in a substantial net social welfare gain for the efficiency impacts. When the toll is charged at the CBD cordon only, the net social welfare would increase more.

A study on The Problems and Improvement Measures of The Capital Gain Tax (양도소득세의 문제점과 개선방안에 관한 연구)

  • Kim, Beom-Jin;Jeon, Jung-Wook
    • Korean Business Review
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    • v.19 no.2
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    • pp.1-21
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    • 2006
  • The purpose of this study is to analysis of the policy and problems of the capital gain tax. So this study identified the problems in the tax system and the method, suggested some ideas that can be useful for reforming the current capital gain tax system. The followings are the concise of some ideas. First, government should adopt the housing market stabilization policy in the long-term period, not in the short-term period which depend on the financial market and the part of home supply. Second, determining the capital gains tax should be transferred to actual market prices system rather than based on the standard assessed prices by government through the nations. By doing so, the desired principles of taxation come true such as principle of taxation on economic substance, principle of taxation on solid foundation and principle of taxation on tax paying ability. Third, transaction taxes should be minimized in the aborting the property speculations and the stabilizing the actual market prices. Fourth, the system of non tax to the owners of 'one family, one house' should be excluded to the tune of principle of tax equity. By doing so, tax payers could be induced to pay taxes on a timely basis not commit to wrong doings. In conclusion, anti-speculation policy should be progressed in such a comprehensive and sustained way as to wipe out the psychology of expectation about the transfer gain's incomes.

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