The Complete CFO Handbook

Chapter 7. Basics of Corporate Taxes and Tax Risk Management

Agenda

Item 1	Discuss the main types of taxes.
Item 2	Explain what tax management is and how it has changed since the 1990s.
Item 3	Identify the role of the CFO in tax management.
Item 4	Identify the factors that had a significant impact on tax directors in assessing tax risk.
Item 5	Explain what tax risk management is.
Item 6	Discuss the different types of tax risk and the types of events that give rise to them.
Item 7	Understand the basics of the U.S. federal income tax code as they pertain to corporate taxes: marginal tax rates, tax treatment of interest expense and dividends paid, dividends‐received deduction, depreciation for tax purposes, and net operating losses.
Item 8	Explain differences in the taxation of corporations in non‐U.S. countries.
Item 9	Understand the issues of thin capitalization and transfer pricing associated with corporate taxation throughout the world.

Taxes are a significant cost in doing business and have a far‐reaching impact on many corporate decisions—strategy, financing, capital budgeting, and corporate acquisitions/joint ventures. Following are the main kinds of taxes paid by a corporation in the United States:

• Income taxes: Taxes specifcally levied on the basis of income.

• Employment taxes: Taxes that are based on income, but specifcally on wage and salary income. In the United States, employment taxes are paid by the employee and the employer.

• Excise taxes: Taxes on certain commodities, such as alcoholic beverages, ...