Tax Due Diligence in MA Transactions
pDue diligence is a crucial part of tax return preparation. Its not just a good method, its an ethical imperative that protects both you and your clients from costly penalties and liability. Tax due diligence can be complex and requires a significant level of care, such as the review of information provided by a client to ensure that its accurate.
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pA thorough review of the tax records is essential for a successful MA deal. It can assist a company negotiate an equitable deal and cut down on costs associated with integration after the deal. It also helps a href=https://allywifismart.com/the-role-of-data-room-due-diligence/ VDRs ensuring seamless and secure cross-border transactions/a identify concerns regarding compliance that could impact the structure of the deal or even the valuation.
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pA recent IRS ruling, for instance it stressed the importance reviewing documents to justify entertainment expense claims. Rev. Rul. 80-266 states that a preparer is not able to meet the general requirement of due diligence by simply reviewing the taxpayers organizer and confirming that all of the entries for expenses and income are accurately reported in the taxpayers supporting documents.
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pAlso, its crucial to examine the reporting requirements for both domestic and foreign organizations. These are subjects that are increasingly under scrutiny by the IRS and other tax authorities. It is essential to look at a companys position within the market, and keep track of any changes that could affect the valuation of financial performance and other metrics. If, for instance the petroleum retailer was operating at an overpriced margin in the marketplace, its performance metrics may decrease when the market returns to normal pricing. Tax due diligence can help prevent these unexpected surprises, and give the buyer the confidence that the transaction is going to succeed.
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