State & Local Tax Controversy Case Study www.cbiz.com/saltcontroversy Issue A Florida state audit of a department store’s income tax raised concerns related to royalty expenses, interest expenses and net operating losses. The findings resulted in a $1.6 million tax assessment for the retailer. Solution Our team of state and local tax professionals worked closely with the department store to protest the findings. We evaluated the retailer’s intercompany transactions, analyzed cash flow and debt agreements and researched historical precedents to gather support for the retailer’s original filing position. The discoveries supported the validity of the retailer’s debt and claimed deductions. We drafted a statement of the taxpayer’s position and held an informal hearing that resulted in

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