A software development company with a large amount of valuable intellectual property approached MWA after being targeted for acquisition. The company had heard about our ability to create tax efficient plans for companies facing the opportunity to sell, so they hired us to develop a strategy for minimizing the tax ramifications of the sale for both the company and its shareholders.
The client understood the sale would present tax challenges, but it had no idea how to minimize tax liability while also maximizing the sale price and without upsetting the buyer. Many of the company’s software developers were also shareholders living in many different states all over the country. The shareholders believed they would be taxed in all the affected states based on their own research, but they hoped they could somehow eliminate or minimize their state and federal tax liabilities.
The Right Solution
After a long discussion with the company’s management to identify all potential tax ramifications of the sale, we researched the federal tax code and applicable state tax codes to develop the most efficient solution for all parties affected by the transaction. Our solution eliminated tax liability in all states except one, and in the one remaining state we developed a unique structure to reduce the tax liability by half of what it would have been without our solution.
Above and Beyond Results
Not only was MWA able to save the client more than $200,000, we also provided peace of mind to the client’s management and shareholders by communicating a complex strategy in an easily understood format and by ensuring all critical questions were fully answered before the client proceeded with the sale.