Barnes Dennig Transfer Pricing After Tax Reform and COVID-19 120920 - BD | Page 22

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NATIONWIDE SERVICE | 877.525.4462 | KBKG . COM

REALIZING SAVINGS – UTILIZE TAX LOSSES

German parent with USCo subsidiary reseller

• ~$ 70m US revenue , purchases in Euros

• Facing market downturn

• Assume ParentCo income is $ 6m @ 30 % rate = $ 1.8m tax

USCo P & L

2018

2019

2020

Total

US Revenue

$ 75.2m

$ 70.3m

$ 65.2m

$ 210.7m

EBIT *

$ 0.9m

$ 0

($ 2.5m )

($ 1.6m )

EBIT Margin

1.1 %

0 %

( 3.8 %)

( 0.7 %)

* EBIT – Earnings Before Interest and Tax