The first challenge was to understand the foreign situation so that an offshore structure could be devised that would minimize domestic taxation, be compatible with the existing foreign ownership, and not incur unnecessary foreign taxes. After receiving information about the foreign organization and its plan for expansion into the United States, Miller Grossbard identified several tax traps and proposed alternatives that would avoid or defer potential U.S. income taxes.

As work progressed on the design of the foreign ownership, a structure began to develop for the domestic network of service companies. After considering the needs of the operating organization, a combination of partnerships and corporations was proposed in conjunction with a domestic holding company. The objective of this structure was to allow the decentralizing of management and to permit essential individuals to participate in ownership. The proposed organization also considered the capital requirements and the tax burden that would result.

The recommendations for the U.S. organization and the foreign ownership structure were both adopted.

The last part of the assignment was more intricate. Miller Grossbard investigated proposals and counteroffers before developing a strategy that would be acceptable to both buyer and seller. Because of our knowledge of federal and state tax systems and our understanding of the time value of money, Miller Grossbard was able to construct an offer that would accommodate both buyer and seller. We looked for trade-offs between cash to the seller today and deferred compensation at a lower tax rate in the future. The analysis included considerations of definite versus contingent payments, income versus capital gain, state income taxes, FICA and Medicare taxes, as well as the time value of money. Given the multitude of variables, the challenge was merely to find the combination that yielded a result suitable to both parties.