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How many times, as your company prepares its federal tax return, do you know–instinctively or through experience–that a position taken on a particular transaction may raise an issue in a post-filing review? As such a review likely will not occur for three or four years, you may have concerns about the currency and retainability of records and keeping track of key players involved in the transaction.
Bottom line, you know that it will cost your company money and resources to resolve the issue, not to mention suffering the uncertainty of the potential tax burden itself. Shouldn’t there be a better way to handle it?.
With pre-filing agreements (PFAs), taxpayers and the IRS work together prior to the filing of the return to resolve the tax treatment of issues that would typically be disputed during a post-filing examination. PFAs can be especially worthwhile in resolving valuation issues such as:
- The deductibility and fair market value of donated property
- The amount of qualified research and experimental credit
- Worthless securities and bad debts
- Ordinary versus capital loss of the sale of property
- The treatment of license fee income
- The gain or loss on the sale of stock
- Asset class life and recovery period decisions in cost segregation studies
Learn more about PFAs in the attached PDF.
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