Tax Income

Review the target company's tax filings to ensure compliance with local, state, and federal tax laws. Verify timely filing of tax returns and payment of taxes.

Identify any unpaid taxes, penalties, or interest that could become obligations for the acquiring company post-acquisition.

Evaluate whether the transaction will be structured as an asset purchase or stock purchase, as this impacts tax treatment and liability transfer.

Assess the target company’s tax attributes, such as net operating losses (NOLs) and tax credits, which may provide tax benefits post-acquisition.

Verify compliance with sales and use tax obligations, especially for companies operating across multiple jurisdictions.

For cross-border transactions, evaluate the target company’s compliance with international tax laws, including transfer pricing and withholding taxes.

Ensure proper withholding and payment of employment taxes, including Social Security, Medicare, and federal/state payroll taxes.

Identify any tax incentives, exemptions, or credits the target company may be utilizing and assess their impact on future operations.

Review any ongoing tax audits, disputes, or litigation that could result in additional liabilities post-acquisition.

Calculate and evaluate the impact of transfer taxes, such as stamp duties, arising from the transaction.

Review the tax implications of intangible assets, such as goodwill, trademarks, and patents, to ensure proper valuation and treatment.

Examine state and local tax obligations, as differing rules may apply, especially in multi-state operations.

Develop a post-acquisition tax strategy to optimize the tax position of the combined entity and minimize future liabilities.