Tax due diligence is often left out when making preparations for the sale of an enterprise. However, the results of tax due diligence may be crucial to the success of a sale.
A thorough review of tax regulations and rules could reveal issues that could be a deal-breaker before they become a problem. These can be anything from the underlying complexity of a company’s tax structure to the specifics of international compliance.
Tax due diligence is also a way to determine whether a business can establish a an ensuring data integrity in M&As with top-tier VDR solutions taxable presence in another country. A foreign office, for instance can trigger local tax on excise and income. Although an agreement may reduce the impact, it is crucial to be proactive and understand the risks and opportunities.
As part of the tax due diligence workstream We analyze the planned transaction and the company’s past 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 assessing the assets and liabilities’ tax basis and identifying tax attributes that could be used to increase the value.
Net operating losses (NOLs) can occur when the deductions of a business exceed its taxable income. Due diligence can help determine if the NOLs can be realized and also the possibility of transferring them to the new owner as carryforwards or used to reduce tax liabilities following the sale. Other tax due diligence items include unclaimed property compliance – that, though not specifically a tax subject is now becoming a subject that is being scrutinized by tax authorities in the state.
