Corporate tax structures and strategies are becoming increasingly more complex and scrutinized by governing authorities across the globe. Multinational businesses need valuation experts who understand their industries, local markets and local economies. Many U.S. domestic and global tax laws and regulations require valuation.
VRC’s international member group, Valuation Research Group (VRG), offers client access to our multinational engagement teams located across the U.S. and internationally. VRG provides quality valuations and value-related tax services for an international business community, serving clients in more than 60 countries. We deliver fair market value of assets for tax compliance and more favorable tax outcomes.
Our experts offer a full range of tax-related, global valuation services, including:
- Check-the-box election
- Foreign tax credit planning
- Thin capitalization
- Transfer pricing (Section 482)
- Worthless stock deduction
VRG’s valuation specialists are local professionals who are located in their respective countries and manage multinational engagements. This offers clients the convenience of a single point of contact with intimate knowledge of local economies, languages, cultures, legislative frameworks and the support of the full VRG network. We understand U.S. GAAP requirements, as well as the tax and financial reporting requirements specific to a particular country. Our professionals have superior management skills, providing clients with deliverables on time, every time.
Our offices are located throughout continental Europe and the United Kingdom, Australia, Argentina, Brazil, Canada, China, Colombia, Germany, India, Japan, Mexico, and the United States. This global network of over 1,300 professionals provides:
- Local market knowledge
- In-country tax expertise
- Cost-effective real property and fixed asset valuations
- Local financial and regulatory reporting experience
We have completed engagements in most industries, including automotive, consumer products, financial services, food, healthcare, energy and power, and professional services.
A check-the-box election under U.S. tax law can result in the retirement of a corporation’s stock and liquidation of its assets to shareholders. VRC helps determine fair market value of those assets—quantifying the tax consequences of the liquidation and establishing new tax bases and capital accounts.
Foreign Tax Credit Planning
U.S. taxpayers often make an election under Internal Revenue Code Section 338. This election gives the buyer a step-up in the basis of the company’s assets, leading to increased depreciation and amortization deductions in the computation of U.S. earnings and profits without additional U.S. tax. U.S. earnings and profits decrease while foreign taxes stay the same resulting in more efficient use of foreign tax credits. Our valuation analyses establish the stepped-up inside basis of the assets to provide the starting point for the U.S. tax earnings and profits calculation.
In most countries, companies must abide by “thin cap” rules in order to take tax deductions for interest expense. These rules prescribe a minimum acceptable debt-to-equity ratio. We determine fair market value of debt obligations and other balance-sheet items so companies can optimize their debt/equity structure.
Transfer Pricing (Section 482)
Business transactions between related parties are subject to the international “arms-length” pricing standard enforced by governmental authorities and taxing jurisdictions worldwide. In the U.S., the arms-length standard applies for both federal and state income tax purposes. These transactions are regulated under IRC Sections 482 and 6662 and applicable case law. VRC can assist clients with preparation of documentation for penalty protection, economic analysis for advanced pricing agreements (APA), transfer pricing planning and tax controversy support.
Worthless Stock Deduction
U.S. companies can take ordinary, as opposed to capital, losses for worthless stock held in foreign subsidiaries. The initial step in the determination of worthlessness is to prove that the fair market value of liabilities exceeds that of assets on a certain date. Off-balance sheet assets and liabilities related to cessation of business (e.g. severance, pension, environmental) are relevant to this determination. VRC can provide valuation analyses as a necessary first step in documenting a Section 165(g)(3) worthless stock deduction.