• Implementing taxes in decision criteria is common in modern capitalbudgeting models. However due to innumerable tax law details the questionarises to what extend consideration of taxation is optimal. In this paper we showthat taking just very basic tax elements into account in capital budgeting modelsdistorts investment decisions. We use marginal prices of sole proprietorshipsor partnerships respectively for both seller and purchaser. The results showthat implementing tax law elements on a very basic level leads to contrarydecisions compared to the case where appropriate tax law details are considered.Further we show to what extend tax law details – especially tax electives – affectconclusions of business entity transactions.
  • [Ute Beckmann, Sebastian Schanz]