Fineman West Finds a $5 Million Mistake in a Prospect’s Buy/Sell Transaction

Client:

Technology industry client

Challenge:

A prospect in the technology sector was expecting a significant gain in a buy/sell transaction. Knowing our expertise in tax reporting for buy/sell transactions, the prospect’s banker suggested they contact Fineman West to serve as a second set of eyes. We were tasked with reviewing the deal thoroughly and ensuring the prospect’s accountants properly reflected the gain from the transaction.

Strategy:

We performed a detailed and thorough review of the client’s situation to uncover any potential problems. We quickly identified a $5 million issue related to the interest expense released in sales transactions. The tax laws regarding buy/sell transaction interest were recently updated due to the Tax Cuts and Jobs Act, and the prospect’s accountants missed this crucial change. Because our team was up to date on tax laws, we caught the mistake and minimized the client’s tax burden.

Result:

Fineman West saved the client $2.5 million at the personal level. Because the gain was recognized by the prospect’s corporation, there was also a $100,000 corporate tax savings. Additionally, our team provided future tax planning that will help the client continue to save money over the next several years.

Need help with a buy/sell transaction? Contact us today at (213) 688-9898 or info@fwllp.com.