By nature, preparing carve-out financial statements is complex. Accounting rules and guidance is limited, leaving much open to interpretation. Time and time again, our clients tell us that preparing carve-out financial statements, including the carve-out tax provision, often prolongs the entire divestiture transaction. First and foremost, preparers of carve-out financial statements for taxable entities must stay current on the changing tax laws and be sure to comply with ASC 740, Income Taxes.
On top of these challenges sits the new tax legislation that was enacted at the end of 2017. The new laws will definitely impact deals and there is a lot of speculation about what will happen as a result of these changes. PwC has been at the forefront of this topic, helping to explain the changes and providing commentary on what this means for companies navigating deals.
We recently developed a report titled, Preparing carve-out tax provisions: Considerations under current tax law, that explains ten key principles that will help enable preparers to manage a carve-out tax provision process with more ease. We want to share of few of these considerations here to give you an idea of what to expect.
Be sure to read our full report for a deeper explanation of all the considerations that can help you navigate the carve-out tax provision process.