Post by Sapphire Capital on Jan 24, 2009 22:04:40 GMT 4
Investment Risk and the Tax Benefit of Deferred Compensation
Ethan Yale
Georgetown University - Law Center
Tax Law Review, 2009
Georgetown Public Law Research No. 1279455
Abstract:
Deferred compensation is thought to generate significant tax savings compared to current compensation in certain circumstances. The standard model used to support this conclusion does not consider investment risk and therefore overstates the tax benefit of deferred compensation significantly. This paper describes three alternative, risk-neutral approaches to measuring the tax benefit of deferred compensation. Each of these approaches avoids misclassifying increases in expected value attributable to increases in investment risk as a tax preference.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1319419_code238438.pdf?abstractid=1279455&mirid=1
Ethan Yale
Georgetown University - Law Center
Tax Law Review, 2009
Georgetown Public Law Research No. 1279455
Abstract:
Deferred compensation is thought to generate significant tax savings compared to current compensation in certain circumstances. The standard model used to support this conclusion does not consider investment risk and therefore overstates the tax benefit of deferred compensation significantly. This paper describes three alternative, risk-neutral approaches to measuring the tax benefit of deferred compensation. Each of these approaches avoids misclassifying increases in expected value attributable to increases in investment risk as a tax preference.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1319419_code238438.pdf?abstractid=1279455&mirid=1