Corporate Tax Management

Increased corporate governance requirements mean that tax advisors must tailor the quality of advice to the client’s ability to implement and the sophistication of the client’s corporate governance practices and procedures.

FIN 48 (mostly codified at ASC 740-10) is an official interpretation of United States accounting rules applicable under U.S. Generally Accepted Accounting Principles. It requires businesses to analyze and disclose income tax risks. A business may recognize an income tax benefit only if it is more likely than not that the benefit will be sustained. The amount of benefit recognized is based on relative probable outcomes.

The Firm helps tax departments establish policies and procedures to address international tax compliance obligations and FIN 48 exposures identified in the course of a financial statement audit.

Sample Representations

  • We advised a multinational manufacturer and distributor on methods to benefit from an exemption to the C.F.C. rules applicable to foreign base company sales income. Although inventory was manufactured by one C.F.C. and sold for distribution by a sister C.F.C., the latter C.F.C. was able to provide substantial assistance in the manufacturing process. We helped the client develop internal tax/business management policies and procedures necessary to meet and document the technical U.S. tax rules. We supported the client’s position in discussions with outside auditors who initially questioned the client’s position.

  • We advised an S.E.C. registrant on matters relating to repatriation of funds for a specific non-recurring business transaction. This enabled the client to continue the accounting treatment under which the earnings of foreign subsidiaries are permanently invested abroad. This allows continued reduction of the tax provision on the client’s financial statements. We assisted in the preparation of submissions to the S.E.C.

  • We advised an S.E.C. registrant in responding to a challenge by its financial statement auditors regarding the U.S. tax effect of a transaction that occurred 10 years previously. The auditors characterized the transaction as a violation of tax rules in a foreign country, and we assisted the client in overcoming that assertion. The project ended in the implementation of a plan to permanently resolve the issue.

  • We assisted a client in quantifying cash and book effective tax rates with respect to profits realized on worldwide real estate operations concentrated in Latin America. This entailed an analysis of the host country rules regarding tax and legal aspects of real property ownership, foreign exchange regulations, and withholding taxes. The host country analysis was combined with the U.S. international tax analysis to arrive at the worldwide effective tax rate.

  • We advised a luxury goods manufacturer with respect to the legal relationships between the U.S. management entity and its Swiss-based design and sales operation. With the assistance of Swiss counsel, we addressed Swiss corporate governance concerns and recommended entity classification strategies under U.S. law designed to better anticipate and manage international tax issues in both the U.S. and Switzerland.