Officer's sideline was not a trade or business

Article Abstract:

It was ruled in the TAM 9310001 that a corporate officer's outside consulting activity could not be considered as an extension of his present business nor asa new trade or business. To be characterized as an expansion of an existing business, the moonlighting officer would have to provide evidence that he was actively involved in an ongoing consultancy before embarking on a new activity,or that his trade or business concern was involved in such an ongoing business.According the Supreme Court's ruling in the 'Groetzinger' case, an activity will qualify as a trade or business if the taxpayer is regularly and continuously involved in the business primarily for profit. Since the officer'ssideline was not considered as a trade or business, he was denied the business deduction benefit offered by Section 162(a) and was not permitted to elect to amortized start-up costs in accordance with Section 195.

Taxation, Supplementary employment

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Large shareholders as monitors: is there a trade-off between liquidity and control?

Article Abstract:

This paper analyzes the incentives of large shareholders to monitor public corporations. We investigate the hypothesis that a liquid stock market reduces large shareholders' incentives to monitor because it allows them to sell their stocks more easily. Even though this is true, a liquid market also makes it less costly to hold larger stakes and easier to purchase additional shares. We show that this fact is important if monitoring is costly: market liquidity mitigates the problem that small shareholders free ride on the effort of the large shareholder. We find that liquid stock markets are beneficial because they make corporate governance more effective. (Reprinted by permission of the publisher.)

Stockholders, Corporate governance, Liquidity (Finance)

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Free trade: why, when and for whom?

Article Abstract:

The advancement of economic theories on free trade reveals that it has been shaped by political events and actual developments. The free-trade argument as situated in the normative dimension of orthodox theory had an explicit prescriptive role of expressing that free trade is efficient. Moreover, the factor-price equalization theorem as framed in the positive dimension of orthodox theory served an implicit prescriptive role stating that free trade is also equitable. As evidenced by the influence of political realities the developments in the international trading system, there has been variation in the application of the free trade doctrine across time.

Free trade

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