Valuation of intangible assets can be a complex aspect of determining the value of a corporation.
IIC, Inc. valued the intangible assets associated with a large financial services company. We performed an in-depth investigation into the reasonableness of a completed valuation and offered our own alternative analysis and results. In particular, we developed a complex, comprehensive computer model to measure the value of these intangible assets. The model incorporated knowledge and inputs regarding the discounting of future cash flows associated with intangible assets, including risk determination and lifing analyses. The culmination of this project was a detailed and extensive report addressing both the theoretical and quantitative aspects of valuing intangible assets associated with a financial services group. This report formed the basis for successful mediation of the issues where IIC, Inc. participated along with both parties to the dispute.

IIC, Inc. reviewed and analyzed the methodologies and computations employed to estimate the fair market value of the tangible assets of a multinational petroleum company for purposes of allocating interest expense under Section 861 of the Internal Revenue code.
We relied on our extensive knowledge of the petroleum industry and our expertise with valuation methods to critique a valuation of this company's upstream and downstream assets. Upon completion of our review, we provided our client with a detailed analysis of the upstream asset valuation, including analyses on the value of proven and probable reserves in the United States and numerous foreign countries. As a part of this analysis, we utilized industry information and our knowledge of foreign financial markets to develop an independent risk analysis to value foreign reserves through adjustments to the weighted average cost of capital. In addition, we relied on accepted valuation methods to perform a similar critique of the downstream asset valuation. We demonstrated the existence of several errors in the downstream asset valuation including assets valued with both the replacement cost method and an income approach. We demonstrated that the valuation proffered by the opposing side failed to meet generally accepted valuation principles and that the valuation model was highly sensitive to minor changes in data and assumptions.

Valuation of intangible assets and determination of a proper royalty for the use of such assets is an increasingly complex matter, but one that confronts taxpayers and taxing authorities on an ever-increasing basis.
IIC, Inc. has considerable experience relating to the proper determination of royalty rates, and has applied methods consistent with the IRS Section 482 transfer pricing rules to measure such rates. In one matter, IIC, Inc. examined the intangible value of several software companies purchased by a domestic company with overseas operations and computed values, including a royalty buy-in amount, which various offshore entities should be charged for the use of the software. IIC, Inc.'s analysis assisted our client to accomplish a successful settlement.

IIC, Inc. recently assisted a client with an investigation into state privilege and retaliatory taxes pertaining to the insurance industry.
Contracted specifically for the purpose of determining any possible pass-through of insurance taxes to the consumer, we provided our client with a detailed report outlining our findings. Our work included a comprehensive review of the elasticity of supply and demand for property and casualty, health, and life insurance. We performed numerous statistical analyses to determine the relative amount of pass-through experienced by consumers in a particular state based on cost-price relationships. We also examined the extent to which the imposition of the taxes conferred market share benefits on the firms not affected by the tax.

For a state taxing authority that applies a unitary tax regime, we analyzed the business activities of an oil refining and marketing company to assess whether certain activities were integral to its overall business.
We analyzed the relationship between upstream production and downstream refining activities to assess the degree of integration as well as the contractual arrangements that the company used to obtain crude oil to supply its refineries. The purpose was to show that various upstream activities should be treated as part of the unitary business.

The prices at which affiliates of multinational companies establish prices to charge each other is governed by the U.S. tax code, Section 482.
The tax code establishes prescribed methods for evaluating such "transfer prices" to determine whether they reflect fair market value. In one of the largest such transfer pricing cases ever brought by the Internal Revenue Service, IIC, Inc. provided expert testimony using a comparable uncontrolled sales method based on actual, documented sales transactions, that the transfer prices used by several multinational oil companies resulted in significant underpayment of taxes to the U.S. Treasury. This work involved detailed analysis of energy markets abroad and in the United States, and the pricing of numerous crude oils produced abroad. We also developed detailed models of the refining operations of these companies to demonstrate the profits earned from their access to crude oils priced below market value. IIC, Inc. prepared several written reports on the issue and also assisted counsel in the development of the cases and the cross examination of opposing expert witnesses.