A New Chapter for Bankruptcy

Unit11. 他对他的研究如此专心致志，从来没有过很快就要退休的念头。

He is so devoted to his research that it never occurs to him that he will soon have to retire. 2. 很多人都曾说过，如果没有有效的制约，我们都有滥用权力的倾向。

Many people have observed that, without effective checks, we all have a tendency to abuse our power.3. 有些国家拒绝卷入这一争端，而且他们对外国的干涉非常反感。

Some countries refuse to get involved in this dispute and they resent any foreign interference.4. 控制沙城暴需要大量的工作和资金。

The control of sandstorm will involve a lot of work and money.5. 你们用这些技术的时候，必须考虑到当地的条件。

You must take the local conditions into consideration when you apply these technologies. 6. 所有的申请者都必须填好这些表格，然后邮寄50美元的报名费。

All applicants will have to fill out these forms and mail in an application fee of 50 dollars 7. 他根据对孩子们行为的观察得出结论：学习是一种自然的乐趣。

Based on his (careful) observation of children’s behavior, he came to the conclusion that learning is a natural pleasure.8. 在一个多民族的国家里，各民族之间的和谐需要小心处理。

Route T o:j Partners j Staff j Managers j FileLIST OF SUBSTANTIVE CHANGES AND ADDITIONSPPC's Guide to Individual Retirement AccountsSixteenth Edition (June 2014)Highlights of this EditionThe following are some of the important update features for this edition.IRA Rollovers. The T ax Court has ruled that taxpayers may have only one IRA rollover per year. In prior years,taxpayers were allowed one rollover for each IRA account. This provision does not affect rollovers from an employer retirement plan to an IRA. The Guide has been updated to reflect these new rollover restrictions. Inherited IRAs. The Supreme Court has ruled as to whether inherited IRAs are an eligible exempt asset in bankruptcy proceedings. This Guide has been updated for the additional planning opportunities required to ensure asset protection.Circular 230. The IRS has revised the regulations under Circular 230, eliminating the concept of “covered opinions.” The Guide has been updated to reflect the new provisions relating to requirements for written advice. myRA Accounts. The federal government announced a new retirement vehicle called the myRA Account. This Guide has been updated to discuss this new vehicle and its requirements.Rollovers as Business Start‐ups (ROBS). ROBS is a methodology in which the taxpayer uses a current retirement fund to fund a start‐up company. The Guide has added discussion on this concept, including cautions relating to potential pitfalls.In addition to these featured items, your Guide includes the following update items detailed below.Chapter Substantive Changes and Additions Reference CHAPTER 1A Model for T ax andFinancial PlanningEngagements1.The IRS has issued new regulations under Circular 230,eliminating the complex rules for covered opinions.Section 108CHAPTER 2Dealing with TraditionalIRAs 1.There are new reporting requirements for hard‐to‐value assets held by an IRA. An alert has been added on these requirements.Section 2012.The T ax Court has ruled that taxpayers may have only one IRA rollover per year. The IRA checklist has been updatedto reflect this decision and a subsequent IRS Announce­ment.Appendix 2ACHAPTER 3Dealing with Roth IRAs 1. A new retirement savings account called the myRA will be introduced in 2014. Discussion has been added of the newaccounts.Section 3022.When contributions are made to both traditional IRA and Roth IRA accounts, there are ordering rules to follow. Thisedition notes these rules.Section 303xirp14subChapter ReferenceSubstantive Changes and Additions3.The decision in the Mazzei case, dealing with excise taxesimposed on improperly shifting assets to a Roth IRA, hasbeen noted.Section 3034.An alert has been added regarding the Bobrow decisionand IRS Ann. 2014‐15, limiting IRA rollovers to one pertaxpayer per year, rather than one per account per year.Section 3075.T axpayers may make in‐plan Roth rollovers from a qualifiedplan to a designated Roth account. Discussion of this typeof rollover has been added.Section 310CHAPTER 4Dealing with SEPs,SARSEPs, SIMPLE IRAsand Payroll DeductionIRAs 1.Regs. 1.1401‐1 and 31.3101‐2 relating to the 0.9% addi­tional Medicare tax were finalized. This additional tax affectsindividuals with earned income in excess of $200,000($250,000 if married filing joint or $125,000 if married filingseparately).Sections 404and 412CHAPTER 5Comparing Types ofIRAs 1. A planning tip has been added regarding using Roth IRAs,rather than traditional IRAs, to avoid either additional tax onsocial security benefits or the 3.8% net investment incometax, depending on taxpayer’s circumstances.Section 5012.The comparison of SEPs and SIMPLE IRA plans has beenrevised.Appendix 5BCHAPTER 6Planning forDistributions 1.Examples have been added showing how traditional IRAdistributions can adversely affect a taxpayer’s income taxliability due to subjecting additional income to the 3.8% netinvestment income tax or causing additional social securitybenefits to become subject to tax.Section 6022. A planning tip has been added discussing the benefit ofconverting a traditional IRA in a loss situation into a qualifiedtuition plan.Section 6023.Noted that inherited IRAs are not eligible for exemption inbankruptcy.Section 6024.The ability to make a tax‐free qualified charitable distributionfrom an IRA expired at the end of 2013.Section 6025.An example has been added showing that a qualified RothIRA distribution has no effect on 3.8% NIIT.Section 6036.An example has been added demonstrating when it may bebetter to claim the initial MRD in the year the taxpayer turnsage 701/2, and when it may be better to delay the distributionuntil April 1 of the following year.Section 6077.The final regulations affecting the purchase of longevityannuities have been finalized. The Guide has been updatedto reflect the guidance concerning these regulations.Section 6078.The Roberts case, in which taxpayer’s estranged wifeforged distribution requests and check endorsements toobtain funds from the taxpayer’s IRA without his knowledge,is discussed.Section 608Chapter ReferenceSubstantive Changes and AdditionsCHAPTER 7Planning for Rollovers 1.The Bobrow case and IRS. Ann. 2014‐15 affect the ability tomake one IRA rollover per taxpayer per year, rather than perIRA account. The Guide has been updated to reflect thesemore stringent rules.Sections 700and 7022. A caution has been added regarding the possibility of a taxplanner being considered a fiduciary of an IRA account.Section 7003.Rollovers as Business Start‐ups (ROBS) are being recom­mended as a method to use the assets in a retirement fundto invest in a start‐up business. The Guide has addeddiscussion of ROBS, including the potential pitfalls.Section 7024.New situations in which the IRS granted a waiver of the60‐day rollover period have been added.Appendix 7BCHAPTER 9Dealing withCompliance 1.The Ellis case, in which a corporation owned by aself‐directed IRA was prohibited from paying the owner ofthe IRA a salary, is discussed.Section 9012.An IRA may be subject to income taxation as a trust ifinvested in certain type assets. The Guide discusses thispotential for income tax on unrelated business taxableincome (UBTI).Section 902CHAPTER 10Fitting IRA Assets intoan Estate Plan 1.An IRA may have the taxpayer’s estate become itsbeneficiary, either through being named or by defaultbecause another beneficiary was not named. This editionof the Guide clarifies discussion of what happens to IRAassets upon the owner’s death if this occurs.Section 10012. A recent Supreme Court decision clarified whether inheritedIRAs are “exempt assets” for bankruptcy protection. TheGuide discusses the ramifications of this decision.Section 10083.Discussion of whether minimum required distributions andhardship distributions are protected in bankruptcy hasbeen expanded.Section 1008CHAPTER 11Marketing IRARetirement PlanServices 1.An example has been added demonstrating the cost of adirect mail marketing campaign.Section 11022.The AICPA will be issuing a revised Code of ProfessionalConduct in December 2014.Section 1105。

CHAPTER 17Financial Leverage and Capital Structure Policy I. DEFINITIONSHOMEMADE LEVERAGEa 1. The use of personal borrowing to change the overall amount of financial leverage towhich an individual is exposed is called:a. homemade leverage.b. dividend recapture.c. the weighted average cost of capital.d. private debt placement.e. personal offset.M&M PROPOSITION Ib 2. The proposition that the value of the firm is independent of its capital structure iscalled:a. the capital asset pricing model.b. M&M Proposition I.c. M&M Proposition II.d. the law of one price.e. the efficient markets hypothesis.M&M PROPOSITION IIc 3. The proposition that the cost of equity is a positive linear function of capital structureis called:a. the capital asset pricing model.b. M&M Proposition I.c. M&M Proposition II.d. the law of one price.e. the efficient markets hypothesis.BUSINESS RISKd 4. The equity risk derived from a firm’s operating activities is called _____ risk.a. marketb. systematicc. extrinsicd. businesse. financialFINANCIAL RISKe 5. The equity risk derived from a firm’s capital structure policy is called _____ risk.a. marketb. systematicc. extrinsicd. businesse. financialCHAPTER 17INTEREST TAX SHIELDa 6. The tax savings of the firm derived from the deductibility of interest expense is calledthe:a. interest tax shield.b. depreciable basis.c. financing umbrella.d. current yield.e. tax-loss carryforward savings.UNLEVERED COST OF CAPITALb 7. The unlevered cost of capital is:a. the cost of capital for a firm with no equity in its capital structure.b. the cost of capital for a firm with no debt in its capital structure.c. the interest tax shield times pretax net income.d. the cost of preferred stock for a firm with equal parts debt and common stock in itscapital structure.e. equal to the profit margin for a firm with some debt in its capital structure.DIRECT BANKRUPTCY COSTSc 8. The explicit costs, such as the legal expenses, associated with corporate default areclassified as _____ costs.a. flotationb. beta conversionc. direct bankruptcyd. indirect bankruptcye. unleveredINDIRECT BANKRUPTCY COSTSc 9. The costs of avoiding a bankruptcy filing by a financially distressed firm are classifiedas _____ costs.a. flotationb. direct bankruptcyc. indirect bankruptcyd. financial solvencye. capital structureFINANCIAL DISTRESS COSTSe 10. The explicit and implicit costs associated with corporate default are referred to as the_____ costs of a firm.a. flotationb. default betac. direct bankruptcyd. indirect bankruptcye. financial distressCHAPTER 17 STATIC THEORY OF CAPITAL STRUCTUREa 11. The proposition that a firm borrows up to the point where the marginal benefit of theinterest tax shield derived from increased debt is just equal to the marginal expense ofthe resulting increase in financial distress costs is called the:a. static theory of capital structure.b. M&M Proposition I.c. M&M Proposition II.d. capital asset pricing model.e. open markets theorem.BANKRUPTCYb 12. The legal proceeding for liquidating or reorganizing a firm operating in default iscalled a:a. tender offer.b. bankruptcy.c. merger.d. takeover.e. proxy fight.LIQUIDATIONc 13. The complete termination of a firm as a going business concern is called a:a. merger.b. repurchase program.c. liquidation.d. reorganization.e. divestiture.ACCOUNTING INSOLVENCYd 14. A firm that has negative net worth is said to be:a. experiencing a business failure.b. in legal bankruptcy.c. experiencing technical insolvency.d. experiencing accounting insolvency.e. in Chapter 11 bankruptcy reorganization.REORGANIZATIONd 15. An attempt to financially restructure a failing firm so that it can continue operating as agoing concern is called a:a. merger.b. repurchase program.c. liquidation.d. reorganization.e. divestiture.CHAPTER 17II. CONCEPTSCAPITAL STRUCTUREb 16. A firm should select the capital structure which:a. produces the highest cost of capital.b. maximizes the value of the firm.c. minimizes taxes.d. is fully unlevered.e. has no debt.CAPITAL STRUCTUREd 17. The value of a firm is maximized when the:a. cost of equity is maximized.b tax rate is zero.c. levered cost of capital is maximized.d. weighted average cost of capital is minimized.e. debt-equity ratio is minimized.CAPITAL STRUCTUREe 18. The optimal capital structure has been achieved when the:a. debt-equity ratio is equal to 1.b. weight of equity is equal to the weight of debt.c. cost of equity is maximized given a pre-tax cost of debt.d. debt-equity ratio is such that the cost of debt exceeds the cost of equity.e. debt-equity ratio selected results in the lowest possible weighed average cost ofcapital.BREAK-EVEN EBITd 19. ABC, Inc. is comparing two capital structures to determine how to best finance theirf irm’s operations. The first option consists of 100 percent equity financing. The secondoption is based on a debt-equity ratio of .40. What should ABC do if their expectedearnings before interest and taxes (EBIT) is less than the break-even level? Assumethere are no taxes.a. select the leverage option because the debt-equity ratio is less than .50b. select the leverage option since the expected EBIT is less than the break-even levelc. select the unlevered option since the debt-equity ratio is less than .50d. select the unlevered option since the expected EBIT is less than the break-even levele. cannot be determined from the information providedBREAK-EVEN EBITa 20. You have computed the break-even point between a capital structure that has no debtand one that has debt. Assume there are no taxes. At the break-even level, the:a. firm is just earning enough to pay for the cost of the debt.b. firm’s earnings before interest and taxes are equal to zero.c. earnings per share for the levered option are exactly double those of the unleveredoption.d. advantages of leverage exceed the disadvantages of leverage.e. firm has a debt-equity ratio of .50.CHAPTER 17 BREAK-EVEN EBITa 21. Which one of the following statements is correct concerning the relationship between acapital structure with debt and one without debt? Assume there are no taxes.a. When a firm is operating at a point where the actual earnings before interest and taxes(EBIT) exceed the break-even level, then adding debt to the capital structure willincrease the earnings per share (EPS).b. The earnings per share will equal zero when EBIT is zero for a levered firm.c. The advantages of leverage primarily occur when EBIT is just barely positive.d. The firm’s EPS will always be higher if the firm uses leverage.e. EPS are more sensitive to changes in EBIT when a firm is unlevered.HOMEMADE LEVERAGEd 22. Bryan invested in Bryco, Inc. stock when the firm was financed solely with equity. Thefirm is now utilizing debt in its capital structure. To unlever his position, Bryan needsto:a. borrow some money and purchase additional shares of Bryco stock.b. maintain his current position as the debt of the firm did not affect his personal leverageposition.c. sell some shares of Bryco stock and hold the proceeds in cash.d. s ell some shares of Bryco stock and loan it out such that he creates a personal debt-equity ratio equal to that of the firm.e. create a personal debt-equity ratio that is equal to exactly 50 percent of the debt-equityratio of the firm.HOMEMADE LEVERAGEe 23. The capital structure chosen by a firm doesn’t really matter because of:a. taxes.b. the interest tax shield.c. the relationship between dividends and earnings per share.d. the effects of leverage on the cost of equity.e. homemade leverage.M&M PROPOSITION I, NO TAXc 24. M&M Proposition I with no tax supports the argument that:a. business risk determines the return on assets.b. the cost of equity rises as leverage rises.c. it is completely irrelevant how a firm arranges its finances.d. a firm should borrow money to the point where the tax benefit from debt is equal to thecost of the increased probability of financial distress.e. financial risk is determined by the debt-equity ratio.M&M PROPOSITION I, NO TAXa 25. The proposition that the value of a levered firm is equal to the value of an unleveredfirm is known as:a. M&M Proposition I with no tax.b. M&M Proposition II with no tax.c. M&M Proposition I with tax.d. M&M Proposition II with tax.e. static theory proposition.CHAPTER 17M&M PROPOSITION I, NO TAXa 26. The concept of homemade leverage is most associated with:a. M&M Proposition I with no tax.b. M&M Proposition II with no tax.c. M&M Proposition I with tax.d. M&M Proposition II with tax.e. static theory proposition.M&M PROPOSITION II, NO TAXc 27. Which of the following statements are correct in relation to M&M Proposition II withno taxes?I. The return on assets is equal to the weighted average cost of capital.II. Financial risk is determined by the debt-equity ratio.III. Financial risk determines the return on assets.IV. The cost of equity declines when the amount of leverage used by a firm rises.a. I and III onlyb. II and IV onlyc. I and II onlyd. III and IV onlye. I and IV onlyM&M PROPOSITION I, WITH TAXa 28. M&M Proposition I with tax supports the theory that:a. there is a positive linear relationship between the amount of debt in a levered firm andits value.b. the value of a firm is inversely related to the amount of leverage used by the firm.c. t he value of an unlevered firm is equal to the value of a levered firm plus the value ofthe interest tax shield.d. a firm’s cost of capital is the same regardless of the mix of debt and equity used by thefirm.e. a firm’s weighted average cost of capital increases as the debt-equity ratio of the firmrises.M&M PROPOSITION I, WITH TAXd 29. M&M Proposition I with taxes is based on the concept that:a. the optimal capital structure is the one that is totally financed with equity.b. the capital structure of the firm does not matter because investors can use homemadeleverage.c. the firm is better off with debt based on the weighted average cost of capital.d. the value of the firm increases as total debt increases because of the interest tax shield.e. the cost of equity increases as the debt-equity ratio of a firm increases.CHAPTER 17 M&M PROPOSITION II, WITH TAXa 30. M&M Proposition II with taxes:a. has the same general implications as M&M Proposition II without taxes.b. reveals how the interest tax shield relates to the value of a firm.c. supports the argument that business risk is determined by the capital structureemployed by a firm.d. supports the argument that the cost of equity decreases as the debt-equity ratioincreases.e. reaches the final conclusion that the capital structure decision is irrelevant to the valueof a firm.M&M PROPOSITION IIc 31. M&M Proposition II is the proposition that:a. supports the argument that the capital structure of a firm is irrelevant to the value ofthe firm.b. the cost of equity depends on the return on debt, the debt-equity ratio and the taxrate.c. a firm’s cost of equity capital is a positive linear function of the firm’s capitalstructure.d. the cost of equity is equivalent to the required return on the total assets of a firm.e. supports the argument that the size of the pie does not depend on how the pie is sliced. BUSINESS RISKd 32. The business risk of a firm:a. depends on the level of unsystematic risk associated with the assets of the firm.b. is inversely related to the required return on the firm’s assets.c. is dependent upon the relative weights of the debt and equity used to finance the firm.d. has a positive relationship with the cost of equity for that firm.e. has no relationship with the required return on a firm’s assets according to M&MProposition II.FINANCIAL RISKd 33. Which of the following statements concerning financial risk are correct?I. Financial risk is the risk associated with the use of debt financing.II. As financial risk increases so too does the cost of equity.III. Financial risk is wholly dependent upon the financial policy of a firm.IV. Financial risk is the risk that is inherent in a firm’s operations.a. I and III onlyb. II and IV onlyc. II and III onlyd. I, II, and III onlye. I, II, III, and IVCHAPTER 17INTEREST TAX SHIELDe 34. The present value of the interest tax shield is expressed as:a. (T C⨯ D) ÷ R A.b. V U + (T C⨯D).c. [EBIT ⨯ (T C⨯ D)] ÷ R U.d. [EBIT ⨯ (T C⨯ D)] ÷ R A.e. T c⨯ D.INTEREST TAX SHIELDc 35. The interest tax shield has no value for a firm when:I. the tax rate is equal to zero.II. the debt-equity ratio is exactly equal to 1.III. the firm is unlevered.IV. a firm elects 100 percent equity as their capital structure.a. I and III onlyb. II and IV onlyc. I, III, and IV onlyd. II, III, and IV onlye. I, II, and IV onlyINTEREST TAX SHIELDc 36. The interest tax shield is a key reason why:a. the required rate of return on assets rises when debt is added to the capital structure.b. the value of an unlevered firm is equal to the value of a levered firm.c. the net cost of debt to a firm is generally less than the cost of equity.d. the cost of debt is equal to the cost of equity for a levered firm.e. firms prefer equity financing over debt financing.INTEREST TAX SHIELDd 37. Which of the following will tend to diminish the benefit of the interest tax shield givena progressive tax rate structure?I. a reduction in tax ratesII. a large tax loss carryforwardIII. a large depreciation tax deductionIV. a sizeable increase in taxable incomea. I and II onlyb. I and III onlyc. II and III onlyd. I, II, and III onlye. I, II, III, and IVCHAPTER 17 BANKRUPTCYe 38. Which one of the following statements concerning bankruptcy is correct?a. The administrative costs incurred in a bankruptcy are considered indirect bankruptcycosts.b. Bondholders have a greater incentive than stockholders to keep a firm from filing forbankruptcy.c. Bankruptcy is sometimes used as a means to increase payroll costs.d. The assets of a firm tend to increase in value when a firm is in financial distress.e. An implicit cost of bankruptcy is the loss of key employees.BANKRUPTCYe 39. Indirect bankruptcy costs:a. effectively limit the amount of equity a firm issues.b. serve as an incentive to increase the financial leverage of a firm.c. include direct costs such as legal and accounting fees.d. tend to increase as the debt-equity ratio decreases.e. include the costs incurred by a firm as it tries to avoid seeking bankruptcy protection. OPTIMAL CAPITAL STRUCTUREe 40. When a firm is operating with the optimal capital structure:I. the debt-equity ratio will also be optimal.II. the weighted average cost of capital will be at its minimal point.III. the required return on assets will be at its maximum point.IV. the increased benefit from additional debt is equal to the increased bankruptcy costs of that debt.a. I and IV onlyb. II and III onlyc. I and II onlyd. II, III, and IV onlye. I, II, and IV onlyOPTIMAL CAPITAL STRUCTUREd 41. The optimal capital structure will tend to include more debt for firms with:a. the highest depreciation deductions.b. the lowest marginal tax rate.c. substantial tax shields from other sources.d. lower probability of financial distress.e. less taxable income.OPTIMAL CAPITAL STRUCTUREc 42. The optimal capital structure of a firm _____ the marketed claims and _____ thenonmarketed claims against the cash flows of the firm.a. minimizes; minimizesb. minimizes; maximizesc. maximizes; minimizesd. maximizes; maximizese. equates; (leave blank)CHAPTER 17OPTIMAL CAPITAL STRUCTUREc 43. The optimal capital structure:a. will be the same for all firms in the same industry.b. will remain constant over time unless the firm does an acquisition.c. of a firm will vary over time as taxes and market conditions change.d. places more emphasis on the operations of a firm rather than the financing of a firm.e. is unaffected by changes in the financial markets.M&M THEORYb 44. The basic lesson of M&M Theory is that the value of a firm is dependent uponthe:a. capital structure of the firm.b. total cash flows of the firm.c. percentage of a firm to which the bondholders have a claim.d. tax claim placed on the firm by the government.e. size of the stockholders claims on the firm.OBSERVED CAPITAL STRUCTURESb 45. Corporations in the U.S. tend to:a. minimize taxes.b. underutilize debt.c. rely less on equity financing than they should.d. have extremely high debt-equity ratios.e. rely more heavily on bonds than stocks as the major source of financing. OBSERVED CAPITAL STRUCTURESe 46. In general, the capital structures used by U.S. firms:a. tend to overweigh debt in relation to equity.b. are easily explained in terms of earnings volatility.c. are easily explained by analyzing the types of assets owned by the various firms.d. tend to be those which maximize the use of the firm’s available tax shelters.e. vary significantly across industries.BANKRUPTCY PROCESSc 47. A firm is technically insolvent when:a. it has a negative net worth on its balance sheet.b. the value of the firm’s assets is less than the value of the firm’s liabilities.c. it is unable to meet its financial obligations.d. it files the legal forms petitioning for bankruptcy protection.e. the value of its stock declines by more than 50 percent.BANKRUPTCY PROCESSb 48. Which one of the following statements is correct concerning a Chapter 7 bankruptcy?a. A firm in Chapter 7 bankruptcy is reorganizing its operations such that is can return tobeing a viable concern.b. Under a Chapter 7 bankruptcy, a trustee will assume control of the firm’s assets untilthose assets can be liquidated.c. Chapter 7 bankruptcies are always involuntary on the part of the firm.d. Under a Chapter 7 bankruptcy, the claims of creditors are paid prior to theadministrative costs of the bankruptcy.e. Chapter 7 bankruptcy allows a firm to restructure its equity position such that newshares of stock are generally issued prior to the firm coming out of bankruptcy. BANKRUPTCY PROCESSe 49. Under a Chapter 7 bankruptcy, which one of the following is generallyconsidered to be the highest priority claim?a. consumer claimb. dividend payment to preferred shareholderc. company contribution to the employees’ retirement accountd. payment to an unsecured creditore. payment of employee wagesBANKRUPTCY PROCESSe 50. A firm may file for Chapter 11 bankruptcy:I. in an attempt to gain a competitive advantage.II. using a prepack.III. while allowing the current management to continue running the firm.IV. even though it is not insolvent.a. I and III onlyb. I, II, and IV onlyc. I and II onlyd. III and IV onlye. I, II, III, and IVSTATIC THEORY OF CAPITAL STRUCTUREa 51. The static theory of capital structure:a. assumes that the firm’s operations and assets are fixed.b. assumes that the firm’s o perations are fixed but that its assets are increasing.c. supports increasing the leverage employed by a firm when the probability of financialdistress becomes significant.d. equates the benefits of equity financing to the costs associated with the probability offinancial distress.e. states that a firm should operate at the point where the cost of capital is maximized.STATIC THEORY OF CAPITAL STRUCTUREc 52. The static theory of capital structure supports the theory that value-maximizingmanagers will:a. look to the asset side of the balance sheet to increase firm value since the mix of debtand equity selected is unlikely to affect firm value.b. not concern themselves with the capital structure of the firm as it is an irrelevant issue.c. select the capital structure for which the cost associated with the probability offinancial distress equals the benefit of the interest tax shield.d. select an all equity capital structure to ensure the value of the firm is maximized.e. select the capital structure which maximizes the interest tax shield.III. PROBLEMSBREAK-EVEN EBITe 53. Becker Industries is considering an all equity capital structure against one with bothdebt and equity. The all equity capital structure would consist of 25,000 shares of stock.The debt and equity option would consist of 15,000 shares of stock plus $250,000 ofdebt with an interest rate of 7 percent. What is the break-even level of earnings beforeinterest and taxes between these two options? Ignore taxes.a. $41,150b. $41,450c. $41,500d. $42,680e. $43,750BREAK-EVEN EBITa 54. Blackstone, Inc. is currently an all equity firm that has 65,000 shares of stockoutstanding at a market price of $22 a share. The firm has decided to leverage theiroperations by issuing $605,000 of debt at an interest rate of 6.5 percent. This new debtwill be used to repurchase shares of the outstanding stock. The restructuring isexpected to increase the earnings per share. What is the minimum level of earningsbefore interest and taxes that Blackstone is expecting? Ignore taxes.a. $92,950b. $94,700c. $95,250d. $95,400e. $96,150BREAK-EVEN EBITb 55. Martha White’s Fabrics is currently an all equity firm that has 15,000 shares of stockoutstanding at a market price of $12.50 a share. Company management has decided toissue $50,000 worth of debt and use the funds to repurchase shares of the outstandingstock. The interest rate on the debt will be 9 percent. What are the earnings per share atthe break-even level of earnings before interest and taxes? Ignore taxes.a. $1.005b. $1.125c. $1.175d. $1.200e. $1.250HOMEMADE LEVERAGEc 56. Martin & Sons (M&S) currently is an all equity firm with 40,000 shares of stockoutstanding at a market price of $25 a share. The company’s earnings before interestand taxes are $80,000. M&S has decided to add leverage to their financial operationsby issuing $500,000 of debt with a 7 percent interest rate. This $500,000 will be usedto repurchase shares of stock. You own 1,000 shares of M&S stock. You also loan outfunds at a 7 percent rate of interest. How many of your shares of stock in M&S mustyou sell to offset the leverage that the firm is assuming? Assume that you loan out allof the funds you receive from the sale of your stock.a. 400 sharesb. 450 sharesc. 500 sharesd. 550 sharese. 600 sharesHOMEMADE LEVERAGEd 57. You currently own 500 shares in K&S Stores. K&S is currently an all equity firm thathas 25,000 shares of stock outstanding at a market price of $10 a share. The company’searnings before interest and taxes is $20,000. K&S has decided to issue $150,000 ofdebt at a 6 percent rate of interest. This $150,000 will be used to repurchase shares ofstock. How many shares of K&S stock must you sell to unlever your position if youcan loan out funds at a 6 percent rate of interest?a. 150 sharesb. 200 sharesc. 250 sharesd. 300 sharese. 500 sharesHOMEMADE LEVERAGEd 58. R&F Enterprises is an all equity firm with 70,000 shares of stock outstanding at amarket price of $8 a share. The company has earnings before interest and taxes of$42,000. R&F decides to issue $200,000 of debt at a 7 percent rate of interest. The$200,000 will be used to repurchase shares of the outstanding stock. Currently, youown 1,500 shares of R&F stock. How many shares of this stock must you sell tounlever your position if you can loan out funds at a 7 percent rate of interest?a. 489 sharesb. 497 sharesc. 508 sharesd. 536 sharese. 541 sharesa 59. Thompson & Thomson is an all equity firm that has 500,000 shares of stockoutstanding. The company is in the process of borrowing $8 million at 9 percentinterest to repurchase 200,000 shares of the outstanding stock. What is the value of thisfirm if you ignore taxes?a. $20.0 millionb. $20.8 millionc. $21.0 milliond. $21.2 millione. $21.3 millionM&M PROPOSITION I, NO TAXc 60. Uptown Interior Designs is an all equity firm that has 40,000 shares of stockoutstanding. The company has decided to borrow $1 million to buy out the shares of adeceased stockholder who holds 2,500 shares. What is the total value of this firm ifyou ignore taxes?a. $15.5 millionb. $15.6 millionc. $16.0 milliond. $16.8 millione. $17.2 millionM&M PROPOSITION I, NO TAXe 61. You own 25 percent of Unique Vactions, Inc. You have decided to retire and want tosell your shares in this closely held, all equity firm. The other shareholders have agreedto have the firm borrow $1.5 million to purchase your 1,000 shares of stock. What isthe total value of this firm today if you ignore taxes?a. $4.8 millionb. $5.1 millionc. $5.4 milliond. $5.7 millione. $6.0 millionM&M PROPOSITION II, NO TAXd 62. Your firm has a debt-equity ratio of .75. Your pre-tax cost of debt is 8.5 percent andyour required return on assets is 15 percent. What is your cost of equity if you ignoretaxes?a. 11.25 percentb. 12.21 percentc. 16.67 percentd. 19.88 percente. 21.38 percentb 63. Bigelow, Inc. has a cost of equity of 13.56 percent and a pre-tax cost of debt of 7percent. The required return on the assets is 11 percent. What is the firm’s debt-equityratio based on M&M II with no taxes?a. .60b. .64c. .72d. .75e. .80M&M PROPOSITION II, NO TAXd 64. The Backwoods Lumber Co. has a debt-equity ratio of .80. The firm’s required returno n assets is 12 percent and its cost of equity is 15.68 percent. What is the pre-tax costof debt based on M&M II with no taxes?a. 6.76 percentb. 7.00 percentc. 7.25 percentd. 7.40 percente. 7.50 percentM&M PROPOSTION I, WITH TAXb 65. The Winter Wear Company has expected earnings before interest and taxes of $2,100,an unlevered cost of capital of 14 percent and a tax rate of 34 percent. The companyalso has $2,800 of debt that carries a 7 percent coupon. The debt is selling at par value.What is the value of this firm?a. $9,900b. $10,852c. $11,748d. $12,054e. $12,700M&M PROPOSITION I, WITH TAXb 66. Gail’s Dance Studio is currently an all equity firm that h as 80,000 shares of stockoutstanding with a market price of $42 a share. The current cost of equity is 12 percentand the tax rate is 34 percent. Gail is considering adding $1 million of debt with acoupon rate of 8 percent to her capital structure. The debt will be sold at par value.What is the levered value of the equity?a. $2.4 millionb. $2.7 millionc. $3.3 milliond. $3.7 millione. $3.9 million。

破产翻译Bankruptcy (破产) refers to a legal status, often enforced by the court, in which an individual or organization is unable to repay their debts. It is a financial state that occurs primarily when liabilities exceed assets. In this situation, a person or entity may file for bankruptcy in order to seek relief from their financial obligations.Bankruptcy can be a result of various factors, such as business failure, unemployment, medical expenses, or excessive debt. There are several different types of bankruptcy, including Chapter 7, Chapter 11, and Chapter 13, each with its own specific rules and procedures.Chapter 7 bankruptcy, also known as liquidation bankruptcy, is the most common form of bankruptcy for individuals. It involves the liquidation of non-exempt assets to repay creditors. However, certain assets, such as a primary residence or essential personal belongings, may be exempt from liquidation.Chapter 11 bankruptcy, on the other hand, is often used by businesses to reorganize their debts and continue operating. It allows the debtor to propose a plan to restructure their finances and repay creditors over time.Chapter 13 bankruptcy is designed for individuals with regular income who can afford to repay some of their debts over a certain period of time. Under this type of bankruptcy, the debtor proposes a repayment plan, usually lasting three to five years, to repay creditors.When an individual or organization files for bankruptcy, a trustee is appointed to oversee the process. The trustee identifies and collects the debtor's assets, evaluates their financial situation, and distributes the proceeds to creditors according to priority and the bankruptcy laws.There are both advantages and disadvantages to bankruptcy. On one hand, it provides a fresh start for individuals or businesses overwhelmed by debt, as it eliminates or reduces their financial burden. It also prevents creditors from taking further legal actions against the debtor.However, bankruptcy has its drawbacks as well. It can negatively impact an individual's credit score for several years, making it difficult to obtain loans or credit in the future. In addition, not all debts can be discharged through bankruptcy, such as student loans or child support payments.In some cases, filing for bankruptcy may be the best option for those facing overwhelming debt and financial hardship. However, it is important to seek professional advice from a bankruptcy attorney or financial advisor to fully understand the implications and consequences of bankruptcy.In conclusion, bankruptcy is a legal process that allows individuals or organizations to seek relief from their debts when they are unable to repay them. It provides a fresh start for those overwhelmed by financial obligations, but also has its drawbacks. It is crucial to thoroughly consider all available options and seekprofessional guidance before making the decision to file for bankruptcy.。

美国个人破产申请书模板：[申请人姓名][申请人地址][申请人电话][申请人电子邮箱][日期]United States Bankruptcy Court[破产法院所在地区]Re: Personal Bankruptcy PetitionDear Honorable Judge,I, [申请人姓名], residing at [申请人地址], am writing to you today to file a petition for personal bankruptcy under Chapter 7 of the Bankruptcy Code. I am currently unable to repay my outstanding debts and seek the protection of the bankruptcy court to liquidate my assets and discharge my debts.I have carefully reviewed the requirements and qualifications for filing for bankruptcy, and I believe that I meet the necessary criteria to proceed with this action. I am filing this petition in good faith and with the intention of resolving my financial difficulties in the most responsible manner possible.I have listed below my current financial situation, including my assets and liabilities:Assets:- Real property: [房产地址]- Personal property: [个人财产清单]- Financial assets: [金融资产清单]Liabilities:- Creditors: [债权人名称]- Debts: [债务详细清单]I understand that filing for bankruptcy will have a significant impact on my credit rating and financial future. However, I am unable to continue making payments on my debts and am seeking the court's assistance in discharging these obligations. I am also aware that bankruptcy proceedings can be lengthy and complicated, but I am committed to cooperating with the court and my creditors to resolve this matter as quickly as possible.In conclusion, I kindly request the court to grant my petition for personal bankruptcy and discharge my debts in accordance with the provisions of Chapter 7 of the Bankruptcy Code. I am willing to provide any additional information or documentation required by the court to facilitate the bankruptcy process.Thank you for your time and consideration.Sincerely,[申请人姓名]Attachments:1. List of assets and liabilities2. Copy of pay stubs for the past 6 months3. Copy of tax returns for the past 2 years4. Other relevant documents。

外文原文Financial firm bankruptcy and systemic riskIn Fall 2008 when the Federal Reserve and the Treasury injected $85 billion into the insurance behemoth American International Group (AIG), themoney lent to AIGwent straight to counterparties, and very few funds remained with the insurer. Among the largest recipients was Goldman Sachs, to whomabout $12 billionwas paid to undoAIG’s credit default swaps (CDSs). The bailout plan focused on repaying the debt by slowly selling off AIG’s assets, with no intent ion of maintaining jobs or allowing the CDSmarket to continue to function as before. Thus, the government’s effort to avoid systemic risk with AIG was mainly about ensuring that firms with which AIG had done business did not fail as a result. The concerns are obviously greatest vis-a-vis CDSs, ofwhich AIG had over $400 billion contracts outstanding in June 2008.In contrast, the government was much less enthusiastic about aiding General Motors, presumably because they believed its failure would not cause major macroeconomic r epercussions by imposing losses on related firms. This decision is consistent with the view in macroeconomic research that financialfirmbankruptcies pose a greater amount of systemic risk than nonfinancial firmbankruptcies. For example, Bordo and Haubrich (2009) conclude that “...more severe financial events are associated withmore severe recessions...” Likewise, Bernanke (1983) argues the Great Depressionwas so severe because ofweakness in the banking systemthat affected the amount of credit available for investment. Bernanke et al. (1999) hypothesize a financial accelerator mechanism, whereby distress in one sector of the economy leads to more precarious balance sheets and tighter credit conditions. This in turn leads to a drop in investment, which is followed by less lending and a widespread downturn. Were shocks to the economy always to come in the form of distress at nonfinancial firms, these authors argue that the business downturns would not be so severe.We argue instead that the contagious impact of a non financial firm’s bankruptcy is expected to be far larger than that of a financial firm like AIG, although neither would be catastrophic to the U.S. economy through counterparty risk channels. This is not to say that an episode ofwidespread financial distress among our largest banks would not be followed by an especially severe recession, only that such failures would not cause a recession or affect the depth of a recession. Rather such bankruptcies are symptomatic of common factors in portfolios that lead to wealth losses regardless of whether any firm files for bankruptcy.Pervasive financial fragility may occur because the failure of one firm leads to the failure of other firms which cascades through the system (e.g., Davis and Lo, 1999; Jarrow and Yu, 2001). O r systemic risk may wreak havoc when a number of financial firms fail simultaneously, as in the Great Depression when more than 9000 banks failed (Benston, 1986). In the former case, the failure of one firm, such as AIG, Lehman Brothers or Bear Stearns, could lead to widespread failure through financial contracts such as CDSs. In the latter case, the fact that so many financial institutions have failed means that both the money supply and the amount of credit in the economy could fall so far as to cause a large drop in economic activity (Friedman and Schwartz, 1971).While a weak financial systemcould cause a recession, the recession would not arise because one firm was allowed to file bankruptcy. Further, should one or the other firmgo bankrupt, the nonfinancial firmwo uld have the greater impact on the economy.Such extreme real effects that appear to be the result of financial firm fragility have led to a large emphasis on the prevention of systemic risk problems by regulators. Foremost among these policies is “too big to fail” (TBTF), the logic of which is that the failure of a large financial institution will have ramifications for other financial institutions and therefore the risk to the economywould be enormous. TBTF was behind the Fed’s decisions to orchestrate the me rger of Bear Stearns and J.P. Morgan Chase in 2008, its leadership in the restructuring of bank loans owed by Long Term Capital Management (LTCM), and its decision to prop up AIG. TBTF may be justified if the outcome is prevention of a major downswing in the economy. However, if thesystemic risks in these episodes have been exaggerated or the salutary effects of these actions overestimated, then the cost to the efficiency of the capital allocation system may far outweigh any potential benefits from attempting to avoid another Great Depression.No doubt, no regulator wants to take the chance of standing down while watching over another systemic risk crisis, sowe do not have the ability to examine empiricallywhat happens to the economy when regulators back off. There are very fewinstances in themodern history of the U.S.where regulators allowed the bankruptcy of amajor financial firm.Most recently,we can point to the bankruptcy of Lehman,which the Fed pointedly allowed to fail.However,with only one obvious casewhere TBTFwas abandoned, we have only an inkling of how TBTF policy affects systemic risk. Moreover, at the same time that Lehman failed, the Fed was intervening in the commercial paper market and aiding money marketmutual fundswhile AIGwas downgraded and subsequently bailed out. In addition, the Federal Reserve and the Treasury were scaremongering about the prospects of a second Great Depression to make the passage of TARPmore likely. Thuswewill never knowif themarket downturn that followed the Lehman bankrupt cy reflected fear of contagion from Lehman to the real economy or fear of the depths of existing problems in the real economy that were highlighted so dramatically by regulators.In this paper we analyze the mechanisms by which such risk could cause an economy-wide col-lapse.We focus on two types of contagion that might lead to systemic risk problems: (1) information contagion,where the information that one financial firmis troubled is associatedwith negative shocksat other financial institutions largely becaus e the firms share common risk factors; or (2) counterparty contagion,where one important financial institution’s collapse leads directly to troubles at other cred-itor firms whose troubles snowball and drive other firms into distress. The efficacy of TBTF polic ies depends crucially on which of these two types of systemic riskmechanisms dominates.Counterparty contagion may warrant intervention in individual bank failureswhile information contagion does not.If regulators do not step in to bail out an individual firm, the alternative is to letit fail. In the case of a bank, the process involves the FDIC as receiver and the insured liabilities of the firmare very quickly repaid. In contrast, the failure of an investment bank or hedge fund does not involve the FDIC andmay closely resemble a Chapter 11 or Chapter 7 filing of a nonfinancial firm. However, if the nonbank financial firm in question has liabilities that are covered by the Securities Industry Protection Corporation (SIPC), the firmis required by lawunder the Secu rities Industry Protection Act (SIPA) to liquidate under Chapter 7 (Don and Wang, 1990). This explains in large partwhy only the holding company of Lehman filed for bankruptcy in 2008 and its broker–dealer subsidiaries were not part of the Chapter 11 filing.A major fear of a financial firm liquidation, whether done through the FDIC or as required by SIPA, is that fire sales will depress recoveries for the creditors of the failed financial firm and that these fire saleswill have ramifications for other firms in rela ted businesses, even if these businesses do not have direct ties to the failed firm (Shleifer and Vishny, 1992). This fear was behind the Fed’s decision to extend liquidity to primary dealers inMarch 2008 – Fed Chairman Bernanke explained in a speech on financial system stability that“the risk developed that liquidity pressuresmight force dealers to sell assets into already illiquid markets. Thismight have resulted in...[a] fire sale scenario..., inwhich a cascade of failures andliquidations sharply depresses asset prices, with adverse financial and economic implications.”(May 13, 2008 speech at the Federal Reserve Bank of Atlanta conference at Sea Island, Georgia)The fear of potential fire sales is expressed in further detail in the same speech as a reason for the merger of Bear Stearns and JP Morgan:“Bear...would be forced to file for bankruptcy...[which] would have forced Bear’s secured creditors and counterparties to liquidate the underlying collateral and, given the illiquidity of markets, those creditors and counter parties might well have sustained losses. If they responded to losses or the unexpected illiquidity of their holdings by pulling back from providing secured financing to other firms, a much broader liquidity crisis would have ensued.”The idea that creditors of a failed firm are forced to liquidate assets, and to do sowith haste, is counter to the basic tenets of U.S. bankruptcy laws, which are set up to allow creditors the ability to maximize the value of the assets now under their control. If that value is greatest when continuing to operate, the laws allow such a reorganization of the firm. If the value in liquidation is higher, the laws are in no way prejudiced against selling assets in an orderly procedure. Bankruptcy actually reduces the likeliho od of fire sales because assets are not sold quickly once a bankruptcy filing occurs. Cash does not leave the bankrupt firm without the approval of a judge.Without pressure to pay debts, the firm can remain in bankruptcy for months as it tries to decide on the best course of action. Indeed, a major complaint about the U.S. code is that debtors can easily delay reorganizing and slow down the process.If, however, creditors and management believe that speedy assets sales are in their best interest, then they can press the bankruptcy judge to approve quick action. This occurred in the case of Lehman’s asset sale to Barclays, which involved hiring workers whomight have split up were their divisions not sold quickly.中文译文金融公司破产及系统性的风险2008年秋，当美联邦储备委员会和财政部拒绝85亿美金巨资保险投入到美国国际集团时，这边借给美国国际集团的货款就直接落到了竞争对手手里，而投保人只得到极少的一部分资金。

毕业论文外文翻译原文：Mapping the dangers of debt restructuring Many banks and companies are now engaged in debt restructuring negotiations but are unaware of the minefield through which they walk.Many debt restructurings involve something as simple as an extension in the repayment schedule. The interest rate could change. Other terms could be relaxed to enable the borrower to repay rather than force the borrower into default. The borrower might have to post additional security. Affiliates of the borrower could be required to guarantee repayment.DEBTOR CONCERNSDebtors -- especially those whose debt is publicly trading below face value -- need to approach a potential restructuring by first considering whether it will create taxable COD income.Unfortunately, this inquiry is more complicated than simply comparing the principal amount of the old debt to that of the new. The amount of COD income is measured by comparing the issue prices of the old and new debt. The issue price of a debt instrument is a number that most accurately reflects the instrument's true value. In determining the consequences of all exchange, the idea is to compare the true values of both instruments to each other, and the issue price of a debt instrument provides a better reflection of its value than its face or principal amount does. To make a borrower's analysis even more difficult, different rules apply to determine the issue prices of the old and new instruments.Starting with the old debt, its issue price in many cases should equal its face amount. However, if the debt was issued at a discount, then its issue price is equal to the price at which the debt was issued, increased by the amount of the discount that has accrued to date on the debt. Forexample, a company may borrow $700 but promise to repay the lender $1,000 in 10 years when the loan matures. The debt has $300 of original issue discount (OLD). The issue price of that debt is $700. The $300 discount accrues over the life of the loan. The issue price is adjusted over time to include such accruals. Thus, on any given date, the issue price of the old debt is $700 plus the discount that has accrued up to that date.The issue price of the old debt must be compared to the issue price of the restructured debt to determine whether the borrower has COD income. It does if the issue price of the restructured debt is less.The issue price of the restructured debt depends on whether either it or the old debt is traded publicly on an established securities market. If either debt is publicly traded, then the issue price of the restructured debt will be its fair market value. This is because that value should be easy to determine by checking the market listings on the date the debt restructuring is concluded. However, if neither debt instrument is publicly traded, then the issue price of the restructured debt is its face, or principal, amount. (The face amount is used only if the interest rate charged on the restructured debt is at least equal to the applicable federal rate.)In practice, COD income is not a problem in debt restructurings where neither of the debt instruments is publicly traded, unless the lender agrees to write off some of the loan principal.POSSIBLE RELIEFThe borrower can avoid some or all of the COD income in such situations if it can show it is insolvent or by waiting to restructure the debt until it has filed for chapter 11 bankruptcy.An insolvent debtor for this purpose is a debtor whose liabilities exceed the fair market value of its assets. An insolvent debtor does not have to report COD income, up to the amount of its insolvency. However,there is a tax cost: the debtor is required to reduce certain tax attributes for every dollar of COD income that escapes taxation. Tax attributes are particular types of tax benefits that the debtor may have, such as net operating losses, tax credits, and capital losses carried forward from previous years. The debtor must reduce any of these items it has in a certain order until the forgiven COD income has been fully absorbed. A debtor may elect to apply the reduction first against its tax basis in any depreciable property it owns. Although this may seem like an obvious choice to make, a lower tax basis will mean lower depreciation deductions going forward, as well as greater taxable gain if the assets are sold.LENDER CONCERNSLenders need to be careful that a restructuring does not create taxable gain. This could occur if the restructuring increases the value of the debt. The analysis is the same as for the borrower. A mismatch between issue prices of the old debt and restructured debt is unlikely in practice unless at least one of the debt instruments is publicly traded.A debt restructuring might be structured in form as a tax-free recapitalization of the borrower. A lender facing a potential loss might prefer a taxable transaction so that it can claim the loss.Even if a lender gives up more than it gets in return and thus has an economic loss, it may have to report taxable income from the restructuring. If a debt is restructured between interest dates or in any other situation where accrued interest has not yet been included by the lender in income, a portion of the consideration paid to the lender as part of the restructuring will be treated as the interest on the original debt that has accrued but has not yet been paid. Any such amount is taxable as ordinary income. It will increase the lender's tax basis in the original debt for purposes of determining its overall gain or loss on therestructuring. (Since the loss may be a capital loss, the lender could be whip-sawed because that capital loss cannot be used to offset the ordinary income.) A lender may have an argument that no portion of the consideration should be allocable to interest if the debtor is in a questionable financial position and the collectibility of the interest is doubtful. This is an especially important point to keep in mind in cases where the restructuring is prompted by the debtor's current inability to make payments on the old debt.CONVERSION INTO EQUITYOne option for a struggling debtor with little cash today but decent growth prospects is to offer its creditors stock in exchange for their debt instruments. Some debtors might prefer this route because it can improve a company's balance sheet at the same time as it reduces interest expense, without any up-front cash outlay. The tax consequences are similar to those of a debt-for-debt exchange (or debt modification): the debtor might have COD income and the lender might have a gain or loss.The key question is how to value the stock received in the exchange for the purposes of calculating the debtor's COD income and the lender's gain or loss. The debtor is treated as having satisfied the debt with an amount of money equal to the fair market value of the stock. Therefore, if the stock is worth less than the principal amount of the debt, then the debtor will have COD income.The lender does the same calculation to figure out whether it has a gain or loss on the exchange. It compares the market value of the shares it received to its tax basis in the debt instrument. If it acquired the debt at a discount from the face amount, it could have a gain. The lender will have to report part of the stock value as ordinary income to the extent there was accrued, unpaid interest on the debt instrument that the lender has not yet included in income at the time of the exchange.TAX-FREE RECAPITALIZATIONSThe parties to a debt restructuring might try to structure it as a tax-free recapitalization. This only works if the borrower is a corporation. It will not spare the debtor from having to report any COD income, and it may only limit the amount of gain the lender must recognize as taxable income.A recapitalization can take many forms, but it is generally described as a reshuffling of a corporation's capital structure. Examples include an exchange of new debt instruments for old ones, or the issuance of corporate stock in exchange for the cancellation of an old debt instrument. As long as a transaction is motivated by business -- as opposed to tax avoidance -- concerns, many structures are acceptable. One exception is that a stockholder cannot convert its shares into debt and call it a recapitalization (it will be viewed as an outright sale of the shares). Another requirement is that the instruments being exchanged must either be corporate stock or securities. Although the definition is not precise, securities are generally understood to be obligations of a corporation to pay a certain sum of money. Generally, a debt must have a term of at least five years to be considered a security, but other terms of the instrument are important as well.A debtor reaps no benefit from structuring an exchange as a tax-free recapitalization; it can only benefit the lenders.资料来源：Klumpp, Helena. International Tax Review,2002：P27—29.译文：映射债务重组的危险许多银行和公司目前正在开展的债务重组谈判，但都是通过这些雷区行走而并不知情。

破产总结报告500字范文英文回答：Executive Summary of Bankruptcy Report.Bankruptcy is a legal proceeding initiated when a person or business is unable to repay outstanding debts or obligations. The purpose of bankruptcy is to provide the debtor with a fresh start by discharging or restructuring their debts.There are two main types of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 bankruptcy is a liquidation proceeding, in which the debtor's nonexempt property is sold and the proceeds are distributed to creditors. Chapter 13 bankruptcy is a reorganization proceeding, in which the debtor proposes a plan to repay their debts over a period of time.The bankruptcy process can be complex and time-consuming. It is important to consult with an attorney to discuss your options and to determine if bankruptcy is the right solution for you.Benefits of Bankruptcy.There are several benefits to filing for bankruptcy, including:Discharge of debts: Bankruptcy can discharge or eliminate certain debts, such as credit card debt, medical debt, and personal loans.Stop creditor harassment: Filing for bankruptcy will put an automatic stay in place, which stops creditors from contacting you and attempting to collect on your debts.Protect your property: Bankruptcy can help you protect your property from foreclosure, repossession, and other legal actions.Risks of Bankruptcy.There are also some risks associated with filing for bankruptcy, including:Negative impact on credit score: Bankruptcy will negatively impact your credit score for a period of time.Loss of property: In Chapter 7 bankruptcy, you may have to surrender some of your property, such as your home or car.Difficulty obtaining credit: After filing for bankruptcy, you may have difficulty obtaining credit for a period of time.Conclusion.Bankruptcy can be a helpful tool for people who are struggling with debt. However, it is important to weigh the benefits and risks of bankruptcy before making a decision. If you are considering filing for bankruptcy, it is important to consult with an attorney to discuss youroptions.中文回答：破产总结报告。