Tax due diligence is often overlooked when planning for the sale of the business. However the results of tax due diligence can be vital to the success of a sale.

A thorough analysis of tax laws and regulations can help identify potential issues that could cause a deal to fail before they become a major issue. It could be anything from the underlying complexity in the financial situation of a business to the nuances of international compliance.

Tax due diligence is also a way to determine whether a business can establish a an international tax-paying entity. For instance, a place of business in a foreign jurisdiction can cause local country income and excise taxes, and even though there’s a treaty between US and the foreign jurisdiction could reduce the effects, it’s vital to know the tax risks and opportunities.

We analyze the proposed transaction, as well as the company’s acquisition and disposal practices in the past, as well as review any international compliance issues. (Including FBAR filings) As part of our tax due diligence program, we also look over the transfer pricing documentation as well as the company’s documents relating to the transfer price. This includes analyzing assets and liabilities’ underlying tax basis and identifying tax attributes that can be used digital boardroom to increase the value.

Net operating losses (NOLs) may occur when a company’s deductions exceed its tax-deductible income. Due diligence can be used to determine if the NOLs can be realized and if they are transferable to the new owner as tax-free carryforwards or used to reduce the tax burden after a sale. Other tax due diligence aspects include unclaimed property compliance which, although not a specific tax issue, is becoming an area of increased scrutiny by tax authorities in the state.