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Evaluating the Effects of ACE Systems on Multinational Debt Financing and Investment
Hebous, Shafik
Ruf, Martin
Shafik Hebous
Theory recommends aligning the tax treatment of debt and equity. A few countries, notably Belgium, have introduced an allowance for corporate equity (ACE) to achieve tax neutrality. We study the effects of adopting an ACE on debt financing, passive investment, and active investment of multinational firms, using high-quality administrative data on virtually all German-based multinationals. We use two main identification strategies, based on (1) synthetic control methods and (2) variations across affiliates within the multinational group. Our results suggest that an ACE reduces the corporate debt ratio of multinational affiliates. Additionally, an ACE increases intra-group lending and other forms of passive investment but has no effects on production investment of multinational affiliates. The findings indicate that a unilateral implementation of an ACE system generates a tax planning opportunity using a structure combining the benefits from the ACE with interest deductions.
Hebous, Shafik & Ruf, Martin, 2018. "Evaluating the Effects of ACE Systems on Multinational Debt Financing and Investment," Working Paper Series 6827, Victoria University of Wellington, Chair in Public Finance.
Handle: RePEc:vuw:vuwcpf:6827
File URL: http://researcharchive.vuw.ac.nz/handle/10063/6827
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repec:zbw:rwirep:0533 is not listed on IDEAS
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ACE; Financial structure; Corporate taxation; Debt bias; Multinational firms;
H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
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You've decided to form a corporation in Washington State. Or maybe you have an existing Washington LLC that you want to convert to a corporation (in which case you should read this blog post first). Either way, you've come to the right place.
In the past, businesses incorporated mainly to protect shareholders, directors, and officers from exposure to personal liability. But with the advent and rise in popularity of the limited liability company (LLC), which also offers liability protection, businesses have other ways of limiting personal liability.
Still, despite the available alternatives, there are very good reasons for some companies to opt for a corporate structure. Assuming you're one of those companies, keep reading to learn some of the key steps for forming a for-profit corporation.
Your first choice is between the C-corporation and the S-corporation. When you pick between the two, what you're doing is choosing how the corporation will be taxed.
A C-corporation's income is taxed twice: (1) at the entity level when earned, and (2) the stockholder level when distributed. Unlike the C-corporation, the income of an S-corporation is not taxed at the entity level. Instead, its profits and losses "pass-through" to stockholders to report, according to their respective share of the company, on their own tax returns.
Related: Starting Your Business: Tax Considerations.
Although the tax treatment of the C-corporation may make it seem less appealing than the S-corporation, only a certain type of company is eligible for S-corporation status. To meet the requirements of being an S-corporation, a company can have only one class of stock, 100 stockholders or less, and (subject to limited exceptions) only U.S. citizens or residents as stockholders.
Unsurprisingly, given the limitations on S-corporation status, most large and publicly traded corporations are C-corporations. Large businesses that want to raise capital publicly benefit from having unlimited shareholders. They also benefit from having different classes of stock, which allows them to create different distribution and voting rights among shareholders.
Note: Startups who plan to seek private investment capital typically opt for C-corporation status as well.
Pick A State. But Not Just Any State.
After you've decided how the corporation will be taxed, you're ready to pick a state of incorporation. You've probably already decided to incorporate in Washington State. And if you intend to do business primarily or exclusively in Washington, then this is probably wise.
But you should keep in mind that, for a number of reasons (some good, others not), companies often incorporate in Delaware, even if they have no affiliation with the state. If you decide to do this, make sure there's a good reason for doing so. For example, if you're a startup and plan to seek venture capital from investors in New York or California, that may be a good reason to incorporate in Delaware, as these investors and their attorneys will be most familiar with that state's well-defined body of corporate law.
However, incorporating in Delaware for no good reason will primarily serve to increase your administrative fees. So make sure you're doing this for the right reasons. Keep in mind that if you do form your corporation in another state, you'll also need to register as a foreign entity in Washington.
Pick A Name. But Not Just Any Name.
Next, you'll want to choose a name for the corporation. But before you rush to order custom letterhead, you'll want to determine whether the name is available in Washington and in any other states where your corporation may qualify to do business. In Washington, you can see if your chosen name is available on the secretary of state's website.
Enter your chosen name in the Simple Business Search box to see if it's available.
Tip: If you're not ready to register yet, but you want to reserve your name, you can do so for a 6-month period by filing an application with the secretary of state.
You'll also want to decide whether the name will be used as a separate domain name, trademark, or service mark. If so, you should consider running a separate search see if there are similar names already in the marketplace.
On the other hand, your name can't contain certain words or phrases, including "bank" or "trust" or "cooperative." Click here for a list of additional words that can't be included in your name.
The name and address of each incorporator (incorporators execute the articles and deliver them to the secretary of state for filing; while they're often attorneys, they don't have to be).
The par value of stock shares.
The terms for a staggered board of directors.
Eliminating or restricting a director's personal liability to the corporation or its shareholders.
Note that there are a number of "default provisions" contained in Washington's Business Corporation Act, which can be found here, and these provisions will apply unless the articles provide otherwise. To ensure you don't mistakenly subject your corporation to one or more of these default provisions, it's smart to consult with an attorney on what the default provisions mean and how they could negatively affect your corporation.
For instance, you may want to prevent shareholders from having preemptive rights, in which case you would have to do so in the articles of incorporation if you're in Washington. The same is true if you want to prevent cumulative voting by shareholders for directors. If you're not sure about how to handle these issues, you may want to consult with an attorney.
Once the articles have been drafted, it's time to file. In Washington, the articles can be filed online, by mail, or in person. Filing should be handled by the incorporator(s), a role that is often handled by an attorney.
In Washington, the current filing fee is $180, though there is an additional $20 fee to file online, which is probably worth paying simply for the convenience.
Finally, you should have an attorney draft the corporate bylaws. While bylaws are not filed with the secretary of state, they are a crucial component of forming a corporation because they set out the rules that will govern how the corporation operates (unless they conflict with the articles of incorporation, which trump the bylaws).
Issuing and transferring stock share certificates.
Establishing corporate officers and committees.
Holding meetings of shareholders and directors.
Electing, removing, and compensating directors and officers.
Once the bylaws have been drafted, they should be formally adopted by the incorporator(s) or the board of directors.
Incorporating your business can seem like a daunting task. But it's manageable, especially if you have legal help for things like drafting the articles of incorporation and the bylaws.


Starting a new business can be a daunting and an expensive process for new entrepreneurs. Quite often, the sole focus of a new business owner is establishing the physical framework of the business, which may include essential building blocks such as finding a space in which to operate, creating a brand presence through a creative name and specialized product/service, and handling necessary employee and tax obligations. Often first-time business owners establish relationships with suppliers, marketing professionals, and accountants out of necessity to assist in the start-up process, but forego contacting a business attorney until after the first few years of their business venture.
By contrast, entrepreneurs who have past experience creating and running small businesses will contact an attorney prior to starting a new venture. There are several reasons why the knowledge and expertise of a business attorney will pay significant dividends to the business owner from the outset and will likely save the business significant legal costs in the long run.
Most new business ventures start due to some form of creative thought on the part of the entrepreneur. The business owner may have an idea for a new product, service, or a way to better provide an existing product or service to its target market. This new idea is at the forefront of business planning and represents the most significant "value add" to the fledgling business. Creating a brand or trade name for the new service or product is one of the most effective ways to garner notoriety for this new venture.
One of the most significant pitfalls for the entrepreneur who foregoes consulting a business attorney during this early process is failing to recognize that the legal rights to this branding concept may already belong to an existing business, or legally conflict with the name, slogan, or logo of another business or product line. Such a conflict can result in the new business owner realizing they are legally precluded from using their brand, but only after sinking significant funds in to its development.
Contacting an experienced business attorney at the outset of this process allows the business owner to ensure that state and/or federal rights to a trade name, logo, domain name, business name, or other brand identification (intellectual property) are available for the business and aligned with one another. If the brand name is available for use, it can be adequately protected from use by competitors through state or federal registration.
Whether it is through an accountant or from doing legal research through the internet, many new business owners properly identify the need to create a formal business entity out of which to run the business. The basic benefit of forming a small business entity such as a limited liability company (LLC) or an S corporation is two-fold. First, the business entity choice should protect the personal assets of the business owner from lawsuits or claims by creditors against the business. Second, the business entity choice should provide some level of tax benefit at an operational level to the business owner.
Despite these perceived benefits, if a business owner fails to consult a business attorney during this important step, these benefits may be diminished in value relative to another entity choice, or even fail to be present at all if the business owner fails to set up the entity properly pursuant to Michigan law.
First, in order to ensure a business entity will protect the personal assets of the business owner, the business owner must do a few things beyond simply forming the entity by filing the Articles at the state level. This includes creating proper entity documents as required by state law and maintaining proper separation between personal and business activities. If the creation of entity documents is attempted without the assistance of a seasoned business attorney, documents are very frequently drafted incorrectly or incompletely, resulting in additional cost to re-draft these documents properly. Similarly, pre-paid internet legal services that provide these documents often fail to address important state law, tax considerations, or provide documents that truly fit the scope and character of the new business.
Second, entity choice can play a significant role in the operational and long-term tax treatment of the business. Limited liability companies (which are taxed as partnerships by default) and S corporations (taxed under Subchapter S of the Federal Tax Code) provide unique business and tax planning opportunities to a business depending on a large number of different factors. These different tax treatments also create significant differences in the long-term tax treatment of the business, affecting choice in succession planning and the manner in which initial owners may form the business without incurring adverse tax consequences. As such, forming the proper entity for the specific product or service being provided at the outset is key in avoiding costly merger or conversion processes that may be utilized to alter initial entity choice after the business has already been formed.
Unless a business owner is operating out of their residence, finding a space to purchase or lease is a necessity in starting a new business. Many business owners will choose to purchase or lease a space because of the physical layout or industry specific equipment present in a particular location. In entering into a purchase agreement or commercial lease, new business owners frequently gloss over significant obligations they are taking on in a rush to get their business open.
Unfortunately, many commercial leases and purchase agreements take advantage of restrictive and burdensome provisions that are not legally permissible in a purchase agreement or lease for residential property. This frequently includes requiring the new business owner to move in to the space accepting its current condition, without an inspection, no matter what potential structural flaws may exist. In the case of commercial leases, the agreement also often requires the tenant to pay for all necessary future repairs to the interior, and the obligation to replace all major equipment in the building, including any industry specific equipment, heating and cooling units, and utility related fixtures. They also often state that any fixtures placed on the property become the property of the landlord. Leases also often seek to take advantage of the excited, eager entrepreneur by asking the entrepreneur to individually sign a personal guaranty under the Lease, leaving their personal assets vulnerable.
It is also commonplace for the business owner to become aware of these obligations only after purchasing the building or becoming locked in to a lengthy lease. Contacting a business attorney prior to signing the document will allow a business owner to anticipate any potential issues with the space, be aware of their potential obligations for repair and maintenance, and allow the business owner an opportunity to negotiate these terms or simply find a different space if these obligations prove too daunting.
The primary reason for delaying or altogether avoiding having a formal contract or agreement drafted by a business attorney is cost. Most frequently, the alternative is for the business owner to utilize a search engine to find a contract that appears to fit their industry. In other situations, business owners will skip the formalities and leave their business dealings to an oral agreement between themselves and the customer.
Despite the appearance of initial cost savings by repurposing an agreement from the internet or foregoing one entirely, a customer agreement that is not tailored to the product or service being provided to the public can create a catastrophic financial loss when a misunderstanding occurs with a customer. This can come from legal fees incurred through litigation and/or the judgment entered against the business in a lawsuit brought by a customer, or lost profits associated with a customer failing to pay and a business owner being unable to enforce its legal rights in collection. Frequently, these disputes arise because there is a difference in expectation between the business owner and the customer as to what was to be provided to the customer and when.
A well-drafted agreement will lay out all the material terms between the parties, and ideally leave no "grey area" for misunderstanding, or for the parties to dispute. In addition, in the event of a lawsuit against the business, provisions would be included in the agreement to benefit the business owner to the maximum extent possible under state law. In addition, any state or federal laws that enable the business to take industry specific collection efforts against a customer delinquent on payment would be in place to avoid loss of important cash flows.
At the end of the day, a well-drafted agreement will grant a business owner the maximum potential to negotiate a resolution without going to court, potentially saving the business thousands of dollars over and above the cost of drafting the agreement in the first place. Similarly, if litigation is inevitable, a well-drafted agreement gives the business solid footing on which to stand, rather than the shaky ground provided by an ambiguous, poorly drafted or incomplete contract. Unfortunately, once a dispute arises, there is no way to turn back the clock and draft an adequate agreement to avoid the dispute or aid in winning the resulting litigation.
Family and friends who own a small business, and other business professionals (financial advisors, CPAs, etc.) can be a great place to start for a referral to a local attorney who specializes in assisting start-ups and new business owners. Finding an attorney in this manner can be very valuable, as the referral is coming from someone who can either personally vouch for the expertise of the business attorney, or from another business professional who trusts the knowledge and integrity of the business attorney with their own clients.


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Q: Scheduling deja-dup to start later When I open "Backups, Scheduling" in 14.04, it gives me a choice between "Every Week" and "Every Day."
I want to schedule a backup every week, beginning at a time when I will be asleep.  But the "Overview" allows me only to "Back Up Now."
How do I schedule the first backup to begin on a later day, at a time of my own choosing?

A: Here you have to use cron where cron is a scheulder for Linux.
Easily run this command to enter a new entry
sudo crontab -e

This wil open a the default editor to edit crontab. If you save and exit the editor, all your cronjobs are saved into crontab. Cronjobs are written in the following format:
* * * * * /some-script.sh

As you can see there are 5 stars. The stars are in the following order:
minute (from 0 to 59)
hour (from 0 to 23)
day of month (from 1 to 31)
month (from 1 to 12)
day of week (from 0 to 6) (0=Sunday)

So in your case
0 2 * * 0 /usr/bin/deja-dup --backup

This means it will run the backup in SunDays of every month at 2:00 AM
you can edit time as you wish
If you like GUI way you can check this Crontab GUI for Ubuntu 12.04

redpajama_set_name: RedPajamaStackExchange


St Mirren have signed Danish winger Anders Dreyer from Brighton on a loan deal for the rest of the season.
The Denmark Under-21 international scored 23 goals in 48 games for Danish top-flight club Esbjerg before moving to Brighton last summer and becoming a feature of their Under-23 team.
Dreyer goes straight into the Buddies' squad for the visit of Hibernian on Sunday.
St Mirren went bottom of the Ladbrokes Premiership in midweek after losing at Celtic but they are looking to build on the momentum of their previous home game, when they came from two goals down to beat Alloa 3-2 in the William Hill Scottish Cup.
Manager Oran Kearney said: "That bit of momentum is important. The fact we had turned it around and had such a great atmosphere here and such a great feeling coming off the pitch, it's important to tap into that and make we get that same type of emotion and performance on Sunday.
"If we do that it gives us a good chance of getting something."


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