Category: Domestic Tax

Forms of Payment and Non-Cash Consideration in Business Sale Transactions

Posted on by Edixon

Buyers and sellers often concern themselves greatly with the “price” in a sale of a business. However, an equally important factor that has a large impact on the actual “value” exchanged between the two parties in a sale is the form or type of “consideration” exchanged for the business, and the timing of when the consideration is settled or paid out in cash. In this article, we will discuss various forms of “consideration” that are often seen in a business sale transaction, and how they impact the value exchanged.

When a notional business valuation is prepared it is usually under the concept of a “fair market value”, which is usually defined as the highest price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, each acting at arm’s-length in an open and unrestricted market, when neither is under compulsion to buy or to sell and when both have reasonable knowledge of relevant facts. However, in open market transactions many of the factors are not always so simple and the purchase price may be paid in a number non-cash forms. As a result, the economic value of the purchase price may be different from the face value of those items and should therefore be assessed on an equivalent cash basis.

Cash

The simplest type of consideration seen in business transactions is cash, paid immediately at the time of closing. When a business is sold and the seller receives the entire purchase price upfront in the form of cash from the buyer, the value to the buyer and seller is equal to the amount of cash exchanged. All-cash transactions offer the lowest risk to the seller, as the cash is received immediately and the purchase price is certain. However, all-cash transactions are generally risker for the buyer. If the business does not perform as expected after the sale, the buyer may not realize the full value of the purchase price paid. Additionally, it is often difficult for a buyer and seller to come to an agreement on the price that should be paid for a business.

As a result, business sales are often structured to include multiple types of consideration. Often, a partial upfront cash payment is made, and the remainder of the purchase price is paid in other ways, such as:

  • Holdbacks • Promissory notes or vendor takebacks • Earn-outs • Share exchanges, either publicly traded or privately held companies Holdbacks Holdbacks are common in transactions for privately held businesses and normally protect the buyer against deficiencies in working capital, debts that were not paid off prior to closing, and undisclosed or unknown liabilities and contingencies such as legal or environmental.

Holdbacks are an effective way to manage risk in a transaction and usually represent only a small portion of the purchase price. Holdbacks tend to be released over an agreed upon time period ranging from six months to two years.

Promissory notes or vendor takebacks (VTB) are forms of debt issued by the seller to the buyer. The promissory note or VTB may or may not bear interest, and the interest may be fixed or variable, and may be higher or lower than comparable commercial rates. VTBs arise when a portion of the negotiated purchase price is withheld by the buyer and is paid to the seller over a period of time, or entirely at a later date.

Buyers often favour VTBs as they lower the up-front investment (i.e., cash) required, while still satisfying the purchase price negotiated between the parties. VTBs are also favourable to buyers, as they tend to motivate sellers to ensure a smooth transition after the sale, as the seller retains a portion of the risk related to the business. Further, when using bank debt to finance the purchase of a business, the lender will typically require at least a portion of the purchase price paid through a VTB in order to ensure the interests of the buyer and seller are aligned. VTBs can also be beneficial to sellers in a number of ways. By agreeing to accept a VTB, sellers are able to lower the up-front capital needed by potential buyers, creating a more competitive sale process and attracting multiple potential buyers. Additionally, in a VTB, the negotiated interest rate may lead to higher returns for the seller than if the entire amount was received in cash up-front.

The economic value of a VTB may be different from the dollar amount, or face amount, that is financed. In order to determine the fair market value (i.e., cash equivalent) of a VTB, the payments of future principal and interest should be discounted using a market interest rate. The sum of the present value of these payments is equal to the total fair market value of the VTB loan.

Earn-outs

An earn-out is when a portion of the purchase price is paid over time based on the prospective revenues, earnings, or some other measure related to the post-acquisition results of the acquired business. Earn-outs are commonly used in a business sale to bridge a pricing gap between the buyer and seller, where the parties may disagree on the future prospects of the business. An earn-out effectively shifts the risk from the buyer to the seller because if prospective results are not realized, the purchase price is reduced. Similar to a VTB, in order to determine the fair market value (i.e., cash equivalent) of an earn-out arrangement, the expected earnout payments should be discounted using a discount rate that considers the risk that payment will not be satisfied, as well as the general risk of the business.

Share Exchanges

When a business is sold to another corporation, the corporation may offer its own shares as currency to finance a transaction leaving the seller with an interest in the combined company after the transaction has taken place. Where the seller is a privately held company, and the buyer is a public company, the seller is typically able to assess the value received if the shares received in exchange are freely tradable. However, the valuation exercise becomes more complex where the seller is restricted from selling the shares for a period of time and/or the public company buyer has a relatively small market capitalization, thereby causing the block of shares held by the seller following the transaction to be somewhat illiquid. In these cases, the value of the publicly traded shares that carry restrictions on trading or are illiquid is generally lower than their face value.

Determining the fair market value (i.e., cash-equivalent) of shares received in a share exchange is particularly complicated where the buyer is also a private corporation (i.e., not publicly traded). In effect, it becomes a relative valuation exercise between the buyer and seller. These situations are further complicated when a controlling interest in a privately held company is sold in exchange for a minority interest position in a privately held, and generally larger company. In these situations, a shareholders agreement becomes extremely important as they typically provide a means for the seller, who ultimately holds minority interest of the combined company, to sell their shares to the remaining shareholders for their prorata value (i.e., without a minority or liquidity discount). In the absence of a shareholders agreement where shares of two private companies are exchanged, the minority position that the seller receives may be worth less than pro-rata value of their shares in the combined company.

Conclusion

Buyers and sellers typically employ a wide range of transaction structures involving different types of consideration such as contingent and non-cash. When assessing a potential transaction as either a buyer or seller, it is important to consider the types of consideration being offered and the associated risks with each consideration to properly evaluate the merits of the transaction and the economic value being exchanged. Additionally, the tax consequences of a transaction varies depending on the transaction structure, and should be discussed with a designated tax professional.

To receive more information on the topics discussed in this article or assistance in determining the most appropriate structure for your business purchase or sale, please contact our valuation and tax specialists.

GST/HST and Damage Payments

Posted on by Edixon

Given the vastness of the GST/HST rules, it is wise to check the GST/HST rules for all transactions, especially those that are non-routine, such as damage payments.  Generally, damage payments do not constitute consideration for a taxable supply under the Excise Tax Act (ETA), so GST/HST is normally not payable. However, section 182(1) of the ETA deems certain damage payments to be consideration for a taxable supply, and inclusive of GST/HST.

Generally, subsection 182(1) applies under the following conditions:

  • there must be a breach, modification, or termination of an agreement for the making of a supply subject to GST/HST, of property or a service in Canada (other than a zero-rated supply);
  • an amount must be paid or forfeited to the supplier, or a debt or other obligation of the supplier must be reduced or extinguished;
  • that amount must be paid as a result of the breach, modification, or termination, and not as consideration for a supply; and
  • exceptions referenced in subsection 182(3) cannot apply (i.e. the section 161 late payment provisions).

The application of this provision is limited, in that it does not apply to damage payments, which are made by the supplier to the recipient.  These rules would seem to apply for the liquidated damages, which can occur in large dollars in construction contracts.   There are common situations that the CRA comments on in Policy Statement P-218, where the rules under subsection 182(1) would not be met, and they include:

  • no prior agreement for the making of a supply existed between the parties;
  • the original agreement was for the making of an exempt or a zero-rated supply;
  • the amount is not paid or forfeited to the person making the original supply, or used to reduce or extinguish a debt of the supplier, e.g., where the person making the payment is the supplier of the original supply;
  • the original agreement was for the making of a supply by a person who was not a registrant;
  • the payment is consideration for the supply under the agreement; or
  • the amount is paid otherwise than as a consequence of the breach, modification or termination of the agreement for the making of a supply.

The CRA does provide a number of examples as to when these rules would and would not apply. If your payment does fall into this provision, subsection 182(1) provides that the place of supply rules that applied to the original supply also apply to the deemed consideration. Thus, if the original supply was zero-rated, the deemed supply under subsection 182(1) will also be zero-rated and no tax will be remittable by the registrant. Furthermore, if the original supply was made in the participating province, then the deemed supply will also be made in the participating province.

We often see contracts where subsection 182(1) of the ETA is not considered in advance; and as this provision deems the payment to be inclusive of GST/HST, it can result in the monies you actually receive to be reduced by 5/105 or 13/113 in Ontario.  If this oversight in the contract is noticed after the fact, as this is a deeming provision, even if the person receiving the damages payment separately is charged GST/HST, this will result in GST/HST being paid twice, as this provision deems GST/HST to have already been included in the damage payment.   Thus, resulting in GST/HST to have been paid twice; first by virtue of the deeming rule discussed above and secondly by virtue of the separate invoice that charged GST/HST in error.

If you are the party making the damage payment, this deeming provision allows you to claim an ITC for the GST/HST deemed to have been paid pursuant to section 182 of the ETA.   If you have made these payments in the prior 4 years, it would be prudent to see if the damages met the rules under 182 of the ETA to recover any GST/HST deemed to have been paid.

Overall, when drafting agreements, it would be wise to contemplate the rules in section 182 of the ETA that apply.  If they do apply, the agreement should ensure the damage payment as calculated in the agreement is grossed up by an amount equal to the GST/HST applicable to the transaction.  Therefore, when the payment is received and GST/HST is calculated into the total payment, you will not be out of pocket the GST/HST.

Underused Housing Tax (UHT): Increased Disclosures and Taxes

Posted on by Edixon

UHT is a 1% federal tax intended to apply to the value of vacant or underused residential real property owned by non-resident non-Canadians. However, many Canadian individuals and other entities are also required to file UHT returns and may even be liable for the tax. Numerous exemptions from the tax itself exist, but significant penalties can apply where the required return is not filed, even if no tax is payable.
UHT was first applicable to the 2022 year, with the first filing deadline being April 30, 2023. However, CRA recently announced (March 27, 2023) that penalties and interest for the 2022 calendar year will be waived for any late-filed UHT return and any late-paid UHT payable, provided the return is filed or the UHT is paid by October 31, 2023. The late filing penalties start at $5,000 for individuals and $10,000 for corporations.

In general, UHT returns must be filed by all persons (which include both individuals and corporations) that are on title of a residential property on December 31 of each year, unless that person is an excluded owner. No tax is applicable if there is no filing obligation.

From an individual perspective, the only excluded owners are Canadian citizens and permanent residents. However, individuals that are on the title of a property in their capacity as a trustee of a trust, or a partner of a partnership, cannot be excluded owners, even if they are Canadian citizens or permanent residents.
From a for-profit corporate perspective, the only excluded owners are public corporations (i.e. listed on a Canadian stock exchange). That is, a private Canadian corporation is not an excluded owner.

Even if a filing obligation exists, an owner may still benefit from one of fifteen exemptions from the tax liability. The exemptions broadly fit into four categories: type of owner; availability of the property; occupant of the property; and location and use of the property. Even though the exemption eliminates the tax, the person still has a filing obligation. The exemptions are listed in Parts 4 through 6 of the UHT Return and Election Form (UHT-2900).

Some of the more common questions and concerns related to the UHT are noted below.

Is my property a “residential property”?

In general, a “residential property” is a property that contains a building with one to three dwelling units under a single land registry title. A unit is considered a dwelling unit if it contains private kitchen facilities, a private bath and a private living area. CRA provides various examples of properties that they view as residential properties in Notice UHTN1, such as: detached houses, duplexes, laneway houses, condominium units and cabins. Apartment buildings, commercial condominiums, hotels and motor homes would not be residential properties. Properties provided through accommodation platforms are likely residential properties (see Notice UHTN15).

How would an income-earning property (such as an Airbnb property or long-term condo rental) that is held by two or more individuals, such as a married couple, be treated?

Although both individuals may be Canadian citizens or permanent residents, there is a possibility that the property is being held in their capacities as partners of a partnership. In that case, the individuals are not excluded owners. The analysis generally starts with determining whether the operating relationship for the income-earning activity constitutes a partnership, which can be complicated. In general, a partnership is a relationship between two or more people carrying on a business, with or without a written agreement, to make a profit. See Notice UHTN15 for guidance.

A parent or child is on title of a property for probate or mortgage purposes.

Where a person is on title but is not a beneficial owner (such as where a relative is on title only for probate or mortgage purposes), they may be holding an interest in the property in their capacity as a trustee of a trust, even if no formal trust agreement is in place. As such, filing may be required even if the individual is a Canadian citizen or permanent resident. Professional advice may be required.

Properties sold before year-end.

UHT may apply in respect of a property sold prior to December 31 if the applicable land title registry has not been updated by the year’s end.

Multiple returns to file.

One return must be filed for each of the properties owned by the person, potentially resulting in multiple filings by a person. Likewise, if multiple persons are on title for a single property, each has their own filing obligation.

Private corporations that own residential property.

Most private corporations that are on title of a residential property will have filing obligations, even if they are holding the property in trust and even if they are exempt from the tax liability.

Owner of residential property passes away.

Usually, some time is needed to transfer title of a property from a deceased person to a beneficiary or executor/trustee of an estate. In cases where an individual has died but is still on title of the property, a filing obligation may still exist. However, if the owner was an excluded owner before their death, CRA has indicated that they will continue to consider them excluded after death. Where the property title has been transferred to a personal representative of the deceased (such as an executor), a special provision applies which allows the new holder to be an excluded owner for a limited period even though they are holding the property in their capacity as a trustee.

ACTION: Consider whether you or your corporation may have UHT filing or tax obligations.

Employee Time Theft: Some Challenges

Posted on by Edixon

A January 11, 2023, BC Civil Resolution Tribunal case addressed a claim for wrongful dismissal. The employer filed a counterclaim in respect of a 50-hour discrepancy between the employee’s timesheets and tracking software data over a period of about a month during which the employee was working remotely.

The employee argued that significant hours were spent working from hard copies; however, this was rebutted by records of printer usage and a lack of evidence of such work being uploaded to the employer’s electronic system. The Tribunal accepted the software evidence of time theft, and indicated that this was a “very serious form of misconduct” which justified the employee’s dismissal. The Tribunal further awarded the employer damages of over $2,600, plus interest, for the unaccounted-for time and an unrepaid advance.

ACTION: As employment work models shift, new employment-related challenges may arise.

Budget 2023: Top Five Items for Owner-Managers

Posted on by Edixon

Budget 2023 (A Made-in-Canada Plan: Strong Middle Class, Affordable Economy, Healthy Future) was introduced in the House of Commons on March 28, 2023. The top five changes that may impact individuals and owner-managed businesses are as follows:

  1. Dental plan – The Canadian Dental Care Plan would be introduced to provide coverage for all uninsured Canadians with an annual family income of less than $90,000 (the previous Canada Dental Benefit only provided benefits for children under 12) by the end of 2023. Benefits would be reduced for families with income between $70,000 and $90,000.
  2. Green investments – New and expanded green investment tax credits for businesses, including for clean electricity at 15%; clean hydrogen ranging from 15% to 40%; clean technology manufacturing at 30%; and expansion of the clean technology investment. Labour requirements, including wage levels and apprenticeship training opportunities, would need to be met to receive the full amount for most business credits.
  3. Intergenerational business transfers – In the summer of 2021, rules were introduced that allowed individuals to benefit from the sale of their corporation to a child’s corporation in the same way as a sale to a third party. Previously, such transfers to a child’s corporation would result in a capital gain being converted into a more highly taxed dividend and also prevent the usage of the capital gains exemption. Budget 2023 proposed amendments to limit the 2021 rules by adding specific eligibility requirements focused on the transfer of ownership, management, and control of the business. The proposals would take effect in 2024.
  4. Employee ownership trusts (EOTs) – Rules were proposed to better facilitate employees buying their employer through a trust. Proposed to be effective in 2024, these rules would provide business owners with an additional exit strategy, where for example, a third-party buyer or transition to a family member is not feasible or desired.
  5. Alternative minimum tax (AMT) – The AMT is an alternative method of calculating taxes that ensures that an individual pays a minimum amount of tax even if they would not have a tax balance under the normal system due to using one or more tax advantages. Budget 2023 proposed to modify the AMT rules to better target wealthier individuals. The standard exemption from this tax would be increased from $40,000 to approximately $173,000; however, the tax rate would be increased from 15% to 20.5%. In addition, many of the deductions and credits currently allowed to reduce AMT would be eliminated or restricted. These changes would be effective for the 2024 tax year.

ACTION ITEM: If you are significantly affected by, or could benefit from, any of these changes, reach out for more information and assistance.

Ontario Interactive Digital Media Tax Credit – What You Need to Know 

Posted on by Edixon

Are you a business owner that is developing interactive digital media products at a permanent establishment in Ontario using employees that reside in the province of Ontario? If so, the Ontario Interactive Digital Media Tax Credit (“OIDMTC”) program may apply to you.

Read the program highlights and full eligibility details in this short synopsis prepared by RSM Canada.

Program Details

 

I Own a Small Business. Should I Incorporate?

Posted on by Edixon

This is a very common question among small business owners, and the answer depends on a number of factors.

THE ADVANTAGES OF INCORPORATING

Limited Liability – Operating your business through a corporation provides some security against personal liability.  It makes it more difficult for someone to go after your personal assets if the business defaults on its debts.  If you operate your business as a proprietorship, your personal assets such as your home could be at risk.  However, if your corporation applies for a business loan your banker may still require a personal guarantee in some circumstances. 

Tax Savings and Deferral – In Ontario, most Canadian-controlled private corporations can earn up to $500,000 profit from their business and only pay a 12.2% tax rate on this income.  This is considerably lower than personal tax rates.  Therefore, there is more money left over to reinvest into the business such as purchasing more equipment or hiring more employees.  You should note that the profits need to stay in the corporation.  If taken out, they must be taxed as either a salary or a dividend to the individual.  At that point, the tax deferral is lost. 

Income Splitting – Income splitting can be a major reason for incorporating your small business.  Dividends can be paid to other family members who have shared ownership.  However, this has changed significantly due to some new tax legislation.  The ability to pay dividends to other family members depends now on the amount of share ownership and their involvement in the business.  You need to consult a tax professional before making any decisions on share ownership where other family members are being considered.

Lifetime Capital Gains Exemption (LCGE) – The LCGE allows some incorporated businesses to be sold at a gain of up to $971,190 per individual without paying any tax.  There are a few specific requirements that must be met before the LCGE can be claimed on the sale of an incorporated business, but with a successful business and proper planning, the possibility is there.

Estate Planning – A corporation is a separate entity to you, so it continues to live on regardless of what happens to you.  This can be helpful when planning to transfer your assets to others.  It is much simpler to pass on to the next generation shares of your corporation rather than all of the assets that would be held by you directly if the corporation did not exist.  If you accumulate significant wealth inside your corporation, you could freeze the value of your estate and thus tax bill on death and let future growth accrue to your children.  In Ontario, you could draft a second will that deals with just your ownership in your corporation.  This allows the shares of the company to pass to your beneficiaries without estate administration taxes (probate fees).  These are just a few examples of how corporations provide more flexibility.

Canada Pension Plan (CPP) – If you are a self-employed proprietor and have business income at or above $66,600 in 2023, you will pay CPP of almost $7,508.90.  If you transferred your business to a corporation and began paying yourself dividends you could eliminate this annual cost.  However, a decision such as this needs to be part of an overall plan.  There may be times you wish to remunerate yourself by way of dividends, and other times by way of a salary.  A corporation gives you that flexibility.

THE DISADVANTAGES OF INCORPORATING YOUR BUSINESS

Administration – The main disadvantage of incorporation comes in the form of administration, which translates to additional costs.  Since the corporation is a separate entity, it has to file its own income tax return.  To do so you will need appropriate accounting records so you can produce annual financial statements, which include an income statement and a balance sheet.  You should hire an accountant to look after this.  You will also need to incur legal costs to incorporate the business and prepare the annual minutes and other filings required by the Business Incorporations Act. 

Losses Are More Difficult to Use – It’s not uncommon for start-up businesses to incur losses at first.  When you operate a proprietorship and incur a loss, you can deduct that loss against your other personal income.  If you were operating that same business through a corporation, the loss could not be applied to your personal income.  Instead, the loss can be applied to another year’s corporate tax return to reduce tax within the company only.  The company could carry the loss backward for up to three years to receive a refund of some previously paid taxes.  Alternatively, the company can carry the loss forward up to twenty years to reduce taxable income on a future return.

If you have any questions, we invite you to contact a DJB tax professional.

GST/HST and Dentists

Posted on by Edixon

Generally speaking, under Section 5 of Part II of Schedule V of the Excise Tax Act (ETA) services provided by a medical practitioner, as defined, in a health care facility, a private clinic, or a doctor’s private office are exempt from HST.  “Medical practitioner” is defined as a person who is entitled under the laws of a province to practice the profession of medicine or dentistry.  In addition, the majority of dental appliances are considered to be zero-rated under the ETA.   That being said, there are various situations when services or goods provided by a dentist may be taxable for GST/HST.

One example where a dentist may be supplying a taxable service as it relates to GST/HST is cosmetic procedures.  The CRA states in GST Memorandum 300-4-2 that surgical and dental procedures that alter or enhance a patient’s appearance but that otherwise has no medical or reconstructive purposes are considered to be cosmetic surgery. The criteria for cosmetic surgery to be medically necessary, and thus not applicable to GST/HST is also listed in the same GST memorandum and includes:

  1. the surgery is necessary to alter a significant defect in appearance caused by disease, trauma, or congenital deformity;
  2. it is recommended by a mental health facility, or
  3. the patient is less than 18 years of age and the defect is in an area of the body that normally and usually would not be clothed.

Examples of GST/HST taxable services and  products provided by a dentist, assuming they are not a small supplier, may include the following if done for cosmetic or other purposes:

  1. Teeth whitening
  2. Mouth guards
  3. Possibly inlays and outlays (see below)

Artificial teeth and orthodontic appliances are zero-rated for GST/HST purposes.  That being said, an implant, crown, cap or onlay that is fabricated to replace 50% or more of a natural tooth will qualify for zero-rating as an artificial tooth.  As a general rule, if it does not replace more than 50% of the existing tooth, it would be taxable for GST/HST purposes.

As a result of the above, dentists may have a mix of exempt and taxable revenue streams, which would result in some portion of the GST/HST paid being claimable as an Input Tax Credit (ITC), and some not.  Generally when there are mixed revenue streams, the taxpayer must allocate the ITC’s on a fair and reasonable basis amongst the taxable and exempt revenue streams.  The allocation of these expenses as it relates to an ITC claim can be complex and heavily scrutinized by the CRA.  The CRA has published GST/HST Memorandum 8.3 as a guideline to what the CRA considers to be ‘fair and reasonable’ allocation methods.   It is important that when determining your fair and reasonable allocation method, that it be documented to defend its reasonableness should it be challenged by the CRA.

Please note that the definitions and rules are more complex than outlined above.  Before you make any changes to your GST/HST, please consult your GST/HST advisor for clarification and what your next course of action should be.

VIDEO LEGACY: What Message Am I Leaving?

Posted on by Edixon

When conducting our estate plans, we are often focused on the distribution of assets (such as homes, bank accounts, investments, and interest in private corporations), providing for dependents, and ensuring overall family harmony. However, softer issues may be overlooked. For example, some suggest that it may be useful to leave a video legacy for surviving family members to view after a loved one passes.

One app, RecordMeNow, allows users to make a video legacy through targeted question-prompting and video recording. Users can create a video library organized into different subject areas for the surviving loved ones. As an individual’s death can rarely be predicted with certainty, the founder advises recording a legacy due to the risk of an untimely death.

The service was originally developed such that children who lost parents at a young age would have something to connect with their deceased parent(s); however, it can be used by individuals of all ages.

For further information see the BBC article (If you die early, how will your children remember you?, Shaw, Douglas), or go to www.recordmenow.org.

ACTION ITEM: What would happen if you were to pass away unexpectedly? Is everything in place such that in the days and years following, the desired results would be achieved? Consider revisiting your estate plan, will, and any other communications you would like to leave for your family.

2023 Provincial Budget – Ontario

Posted on by Edixon

Authored by RSM Canada

On March 21, 2023, Ontario tabled their 2023 Provincial Budgets. To help understand the implications of the budgets across major industries, we have consolidated the key highlights pertinent to middle market companies.

This article was written by Clara Pham and originally appeared on 2023-05-02. Reprinted with permission from RSM Canada LLP.
© 2024 RSM Canada LLP. All rights reserved. https://rsmcanada.com/insights/services/business-tax-insights/2023-provincial-budget-ontario.html

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The information contained herein is general in nature and based on authorities that are subject to change. RSM Canada LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM Canada LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.