BondCalc: Help for Taxes Input Screen
For an indepth, but very readable, discussion of debt taxation
order David C. Garlock's "Federal Income Taxation of Debt
Instruments", Third Edition from Prentice Hall Law & Business at
800-223-0231. It costs $125 and is updated annually.
Tax Table - BondCalc has two tax personalities: The INDIVIDUAL
option assumes that the security buyer is paying the U.S. Income
Tax. Likewise the CORPORATE option assumes the buyer is paying
U.S. Corporate Taxes. Toggling this field will control which of
the input sections below is used.
Processing Control Choices -
NONE - If you are not using after tax numbers then turning
off taxes will speed up calculations.
PREF ONLY - Calculates ONLY when security has tax preferences.
ALL - Calculate after tax for all securities, if possible.
Tax Rates -
State/Local - By separating this rate out for we can calculate
out of state bonds and federal government bonds
exempt from local taxes. See F7 for database of
rates by state.
Regular/Marginal - This is the rate paid on the last dollar
Capital Gains Tax Rate - Currently this rate is the same as
the marginal rate.
Dividend Exclusion Rate - This is the percent of preferred stock
dividend income that taxable corporate investors can exclude.
It is 70% unless the corporation has over 20% ownership and
less than five owners, then it is 80%. On the second page of
the Security input screen you can enter a percent that will
override this global. Can also blank out here if not
ESOP Interest Exclusion Rate - This is the percent of interest
income that ESOP investors can exclude when calculating their
Federal tax liability. Qualified investors under Section 133(a)
include commercial banks, trust companies, insurance companies,
savings and loan associations, certain finance companies and
regulated investment companies (e.g., money market mutual funds
and bond funds). An ESOP is turned on with a Tax Code of 4 on
the second page of the Security input screen. On that page you
can also enter a percent that will override this global.
Fiscal Year End - This is needed for the Earnings Effect report in
the Swap section.
Tax Basis - This controls the cash flow grouping in the Earnings
Effects report in the Swap section.
Date Taxpaying Begins - Taxpaying will begin on dates, on or after
this inputted date. Enter as mm/dd/yy. [Under development.]