Tax Indemnification insurance is designed to reduce uncertainty relating to tax issues involved in Merger & Acquisitions. A Tax Indemnification policy ensures that a specific tax issue, if challenged by a relevant authority, will be interpreted as intended by the parties engaged in the transaction.
In the event that the tax treatment is overturned upon review, the policy pays the difference between the expected and the actual tax liability, along with interests, penalties and certain other costs associated with the defense.
Examples of the types of issues that may be covered by Tax Indemnification insurance include:
- 338(h)(10) elections
- S-Corp Compliance Issues
- Net Operating Loss Protection
- Tax Free Reorganizations
- Eligibility for Long Term Capital Gains Treatment
- Cancelation of Indebtedness
Owens Groups provides expertise in this arena; and with an assessment and a carefully crafted policy, can provide peace of mind.