Expense Apportionment (861-8)

The allocation and apportionment of deductions affects the calculation of the foreign tax credit, the various export tax incentives and the  domestic production activities deduction (“DPAD”)).   These tax benefits and others are limited by the amount of  income from U.S. and non-U.S. sources. The firm works closely with its  clients to understand the factual relationship between its deductions  and the various statutory grouping of income  (FTC and DPAD)  and working within the statutory and regulatory  guidelines systematically identify those methods of apportionment that will produce the most favorable overall results.

Our VantagePoint software uniquely positions the firm to assist clients  in optimizing a wide range of allocation and apportionment methodologies  that are consistent with client facts. Some examples include:

  • Fair market value asset base for interest expense apportionment;
  • Alternative book value method for interest expense apportionment;
  • R&D sales and optional gross income bases;
  • Divisional apportionment; and
  • Activity based costing.

Few firms match our detailed knowledge and IRS examination experience to  support  identifying, documenting and sustaining the most optimal expense  apportionment methodologies.