The impact of the investor model is that it essentially guarantees a return to the intangibles developer for its efforts.
Many companies have already adopted FIN 48 and have turned their attention to the annual disclosure requirements.
For companies who have not filed for bankruptcy, the insolvency exception is critical.
The valuation of a development-stage company’s common stock is best estimated using the methods in the Practice Aid.
Determining the degree of insolvency is a key step since this will dictate the amount of COD income which may be excluded.
A key tax consideration is whether the acquirer will be entitled to a stepped up tax basis in the assets and thus entitled to future tax deductions.
Canada, like the U.S., imposes a thorough set of documentation requirements, and imposes penalties for failure to comply.
In the case of a U.S. acquisition of a foreign target, it was oftentimes beneficial to make a Section 338(g) election.
Obtaining a valuation from an independent valuation provider is essential to proving that the security has no liquidating value.
In the original Practice Aid, there was no mention of the back-solve approach. Since then the technique has come into widespread use.