Tax due diligence is often overlooked when planning for the sale of the business. However, the results of tax due diligence may be vital to the success of a transaction.
A thorough review of tax regulations and rules can uncover potential deal-breaking issues before they become problematic. They can range from the fundamental complexity of a company’s tax structure to the specifics of international compliance.
The tax due diligence process also examines whether a business is likely to create tax-exempt presence in other nations. For example, an office in a foreign country could cause local country taxes on excise and income however, despite the fact that a treaty between the US and the foreign jurisdiction could reduce the impact, it’s crucial to be aware of tax risks and opportunities proactively.
As part of the tax due diligence workstream, we analyze the contemplated transaction and the company’s historical operations in acquisition and disposal and review the company’s transfer pricing documentation and any international compliance issues (including FBAR filings). This includes assessing the assets and liabilities’ tax basis and identifying tax attributes that can be utilized to maximize value.
Net operating losses (NOLs) can result when the deductions of a business exceed its taxable income. Due diligence can be used to determine if these NOLs allywifismart.com can be realized and whether they can either be transferred to the new owner as tax carryforwards or utilized to reduce tax liabilities following a sale. Other tax due diligence issues include unclaimed property compliance – that, though not specifically a tax subject is now becoming a subject that is being scrutinized by state tax authorities.