A transaction cost study helps both buyers and sellers to properly categorize and document the costs associated with transactions, increase cash flow, identify deductible or amortizable transaction costs, and establish documentation required to support deductions.
Performing cost analysis at the outset can identify significant opportunities as well as assist in managing tax risk. Our cost studies consistently result in cash tax savings for our clients, for interim and annual tax reporting periods.
We utilize a two-phased approach in performing a transaction cost study, which can be further tailored to your preferences and timing needs.
Phase 1: Data gathering and evaluation
- Review publicly available information, board minutes, fee invoices, engagement letters, board or shareholder presentations, and other relevant items
- Conduct interviews with appropriate personnel to gain a general understanding of the transaction, relationships with service providers, and critical dates leading up to the transaction
- Interview selected service providers and obtain completed questionnaires to confirm and support the nature of services performed
- Prepare an analysis to support the tax return positions with respect to the categories of
- expenses identified
Phase 2: Documentation
- Prepare a transaction cost study report that will explain the tax authorities, methodologies, and technical analysis supporting the merits of the tax treatment of the various transaction costs
- Prepare an audit defense-ready binder containing all invoices, questionnaires, interview records, time breakdowns, tax work papers, general ledger reconciliations, and other information analyzed during the study