Virtual currencies can have large swings in values from year to year. Where large gains are recognized in one year that are then followed by large losses in a following year, under the annual accounting principle and the Internal Revenue Code the Taxpayer cannot use a capital loss in a future tax year to offset capital gains in a previous tax year. […]
This case highlights the need for C corporations to have a dividend policy and history. It also highlights the need to carefully consider the compensation paid each year to the shareholder-employee of a closely held corporation to have better support of reasonable compensation in order to avoid the recharacterization of deductible compensation to nondeductible dividend distributions. It would likely have been tax advantageous for the Taxpayer to be an S corporation. […]
This case highlights the need for C corporations to have a dividend policy and history. It also highlights the need to carefully consider the compensation paid each year to the shareholder-employee of a closely held corporation to have better support of reasonable compensation in order to avoid the recharacterization of deductible compensation to nondeductible dividend distributions. It would likely have been tax advantageous for the Taxpayer to be an S corporation. […]
An earnout is a contractual mechanism in acquisitions that provide for contingent additional payments from the buyer of the company to the seller’s shareholders. Earnouts are usually received if the business that is acquired meets certain financial or other milestones after the acquisition is closed.
An earnout is a useful tool where the buyer and seller cannot agree on the upfront purchase price, with the earnout as a way of overcoming the different views on valuation of the business being acquired. Earnouts are primarily used in the acquisition of a privately held company which are harder to value than a publicly traded company. […]
There can be additional complexities involved in cross-border acquisitions. It is important to understand the tax treatment in each country in order to ensure the acquiror and target receive the desired result. Techniques for acquisitions in one country can be different than in the other and the resulting tax implications can be significant even if unintended. […]
Read More… from The Critical Role of Tax Treatment and Structuring in International M&A
The information found on a company’s balance sheet is among the most important information for a business leader, regulator, or potential investor to understand. Without this knowledge, it can be challenging to know whether a company is struggling or thriving […]
Read More… from How Assets are Reported on the Balance Sheet
Whether you are a business owner, employee, or investor, understanding how to read and understand the information on a balance sheet is an essential financial accounting skill. […]
Read More… from The Balance Sheet: A Key Financial Statement
The revenues that a company has not yet received payment for and expenses that companies have not yet paid are called accruals. There are four types of accruals that are typically recorded on the balance when the company follows the accrual method of accounting. […]
Read More… from Typical Types of Accruals on the Balance Sheet
Accrual basis accounting is a method of accounting that records transactions when they occur, not when cash is received or paid out. The accrual method of accounting is used to recognize revenue and expenses in the fiscal year they are earned or incurred. […]
Cash basis accounting is a method of accounting that records income when cash is received and expenses when they are paid. It is also known as the cash method of accounting. The cash basis of accounting is usually followed by individuals and small companies. […]
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