When you are the preparation for a sale of a business tax due diligence could seem like an afterthought. However, the results of tax due diligence could be crucial to the success of a sale.
A rigorous review of tax regulations and tax rules can reveal potential issues that could cause a breach before they become problematic. This can range from the fundamental complexity of the financials of a company, to the specifics of international compliance.
The tax due diligence process also examines whether a company is able to establish an taxable presence in different countries. A foreign office, for instance can trigger local taxes on income and excise. Even though a treaty may mitigate the effects, it is essential to be proactive and know the risks and opportunities.
We review the proposed transaction, the company’s acquisition and disposal actions in the past, as well as review any international compliance issues. (Including FBAR filings) As part of our tax due diligence program, we also examine the documentation on transfer pricing and check this link right here now https://allywifismart.com/paperless-board-meeting-guide-make-your-transition-into-a-digital-board-room/ the company’s documents relating to the transfer price. This includes analyzing the underlying tax basis of liabilities and assets and identifying tax attributes that can be used to increase the value.
Net operating losses (NOLs) may occur when a company’s deductions exceed its taxable income. Due diligence can help to determine if the NOLs can be realized, and also whether they are transferable to the new owner as carryforwards or used to reduce tax liability after the sale. Other tax due diligence issues include unclaimed property compliance – which, although not a tax issue is becoming a subject of increased scrutiny by tax authorities in the state.