Sentences with phrase «conversion in a downturn»

Compared with a conversion when asset prices were higher, a conversion in a downturn may result in a lower tax bill for the same number of shares.

Not exact matches

Assuming that the total amount of bad debt in the banking system exceeds total bank capital — something which is almost certainly true — the conversion of debt which can not be serviced into an equity position that is unlikely to generate much more (and in an economic downturn, which is when we are most concerned about the debt burden, we can assume that the decline in value of these equity positions will be highly correlated) leaves the net indebtedness of the banking system unchanged, and so the contingent liabilities of the government are unchanged even as reported debt in the system declines.

If you didn't recharacterize, you'd be paying tax on a conversion amount that is much lower now if there was a downturn in the investments, so your average tax rate is much higher than you'd hoped.