WILL INTANGIBLES TRIP YOU UP?

Many companies have stumbled over the thorny tax issues surrounding indefinite-lived intangible assets -- especially in situations involving business combinations -- and have had to restate their financial statements. In a panel session at the 2014 annual meeting of the American Taxation Association...

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Bibliographic Details
Published in:Strategic finance (Montvale, N.J.) N.J.), 2015-11, Vol.97 (5), p.41
Main Authors: Adams, Mollie T, Inger, Kerry K, Meckfessel, Michele D
Format: Magazinearticle
Language:English
Subjects:
Accounting
Asset acquisitions
Business combinations
Deferred income taxes
Fair market value
Fair value
Financial restatements
Financial statements
GAAP
Goodwill
Intangible assets
Liability
Tax basis
Tax returns
Valuation
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Summary:Many companies have stumbled over the thorny tax issues surrounding indefinite-lived intangible assets -- especially in situations involving business combinations -- and have had to restate their financial statements. In a panel session at the 2014 annual meeting of the American Taxation Association, Stephanie Davis, tax VP at Valero Energy Corp, said that having to amend a tax return wouldn't put her job at risk, but a tax-related restatement of the financial statements would. With merger and acquisition activity on the rise in recent years, more CFOs may face these issues in the future. All business combinations under US Generally Accepted Accounting Principles are required to use acquisition accounting whether they involve a stock acquisition or an asset acquisition. When engaging in mergers and acquisitions, the CFO must consider the tax accounting implications associated with indefinite-lived intangibles to avoid having to restate financial statements.
ISSN:1524-833X