Apple is a technology company that offers an array of technological products for consumers. It is also among the most analyzed, dissected, and talked-about securities globally, as it has among the most significant stock values by market capitalization (Kernny, 2020). Apple offers several bonds, including CH0271171693 expiring on 2/25/2030, AU3CB0237881 expiring on 6/10/2026, CA037833CY47 expiring on 8/19/2024, AU3CB0237899 expiring on 1/10/2024, and AU3CB0232296 expiring on 8/28/2022. The type of bond that Apple offers is a fixed rate bond as the interest rates remain the same throughout the bond’s tenure. Similarly, it is an international bond as it is often offered on an international basis.
Some of the things that define the attractiveness of a bond include bond maturity, secured/unsecured bonds, liquidation preferences, coupon, tax status, as well as bond callability. In addition, some of the key features that I would suggest on a future bond issue would be to offer secured bonds in order to eliminate the risk of loss of investment from the investors and bond owners. This makes the bonds more lucrative and attractive to investors.
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Response to Scott
Hello Scott,
I believe you have chosen a very reputable company to showcase the concept of bonds. As an international company, Verizon is anticipated to offer international bonds, but specifically, I believe they offer fixed rate bonds, usually with a fixed interest rate and maturity date. When stating the characteristics of bonds that make them attractive or not to investors, I believe you should have mentioned things like maturity, tax status, liquidation preference, etc., because they define whether one would be interested in investing in them or not. I also believe that most bonds offer a constant source of income after investment, but depending on their traits, they can be stable or volatile. Nevertheless, I do agree with you on the aspect of issuing bonds when interest rates are low while also offering callable bonds as they make the bonds more attractive for investment.
Class ACC317
When a partner sells their partnership interest, the partner will realize loss or gain. In order to determine the gain or loss, Judy must determine the amount realized via the sale of the interest and the partner’s adjusted basis in their partnership interest. The amount that the partner will realize entails any cash and the fair market value of any received properties. Similarly, Judy should note that when the partnership has liabilities, the realized amount will include the partner’s share of the partnership’s liabilities. However, if Judy is liable for the debt, the realized amount will not include her liability share. It is also crucial to note that regarding the liability for a partnership debt, when the partner indemnifies a partnership debt to her, as per the tax court, the amount realized will include the amount of which the partner has been indemnified (McGuire Law Firm, 2020). Generally, the character of gain or loss is determined by how the partner holds the assets. In cash distributions, there are no gains or losses on the distribution to the partner.
Usually, in many partnership agreements, there are agreements that a partner who wants to dispose of their interest in partnership ought to do so by surrendering it to the partnership in exchange for a liquidating distribution. Many such agreements usually restrict unrestricted sales to the public as the remaining partner does not want to be left with potentially unreliable partners. Similarly, the partnership agreement often has a formula for the determination of the liquidating distribution, which are usually based on the fair market value (FMVs) of partners amount of capital, and thus the partnership property ought to be revalued, and unrecorded intangible assets should be included. However, in operating distribution, it entails the distribution of the profits of the partnership.
Reply to Student
Hi,
I believe some of the advice you have given to Judy are crucial, especially regarding how the amount is determined when disposing of her interest in the partnership. The amount realized is usually the first step before realizing gain or less. In addition, the amounts are typically equivalent to any cash and the fair market value of any received property. I believe you have delved into the intricacies of determination of amount realized, but you should have also mentioned the concept of indemnification, where if a partner indemnifies the selling partner for partnership debt, the amount realized entails the amount of which the partner has been indemnified. I also liked how you mentioned some of the concepts when a partner wants to liquidate a partnership and believe you have addressed them in detail.
References
Kenny, T. (2020). Apple Stock vs. Apple Bonds: Which Is the Better Buy? Retrieved 22 February 2021, from https://www.thebalance.com/apple-stock-vs-apple-bonds-which-is-the-better-buy-417113
McGuire Law Firm. (2020). Tax Implications on Sale of Partnership Interest by Denver Tax Attorney. Retrieved 22 February 2021, from https://jmtaxlaw.com/tax-implications-on-sale-of-partnership-interest/
