When it comes to preparing for a business sale, tax due diligence may appear to be an afterthought. Tax https://allywifismart.com/a-comprehensive-list-of-vdr-software-providers/ due diligence results can be crucial to the success or failure of a business transaction.
A thorough review of tax laws and regulations can reveal potential issues that could cause a breach before they become problematic. They could range from the underlying complexity of a business’s tax situation to the specifics of international compliance.
Tax due diligence also looks at whether a company can create an overseas tax-paying presence. A foreign office, for example could trigger local income and excise tax. Although an agreement may reduce the effects, it is vital to be prepared and be aware of the risks and opportunities.
As part of the tax due diligence workstream We analyze the planned deal and the company’s prior disposal and acquisition activities as well as look over the company’s transfer pricing documentation and any international compliance issues (including FBAR filings). This includes analyzing the assets and liabilities’ tax basis and identifying tax attributes that can be used to increase the value.
Net operating losses (NOLs) may occur when a company’s deductions are greater than its tax-deductible income. Due diligence can be used to determine if the NOLs can be realized and whether they can either be transferred to the new owner as an income tax carryforward or used to reduce the tax burden following a sale. Other tax due diligence items include unclaimed property compliance – that, though not strictly a tax topic is now becoming a subject of increased scrutiny by tax authorities of the state.
