Case Study: a Northeast-based software company achieves $500,000 in tax savings with BDO

Northeast-based Software Company uncovers $500,000 in tax savings with BDO

A Northeast-based software company engaged BDO for state and local tax services as it prepared to sell its business. The sale of the partnership interest would generate significant state tax liabilities for its individual owners across 36 states. The challenge was navigating complex state sourcing rules and a potential pass-through entity tax (PTET) election, which the client's initial analysis showed as beneficial but actually contained a hidden risk of increasing federal tax.

BDO's team quickly analyzed the situation and advised against the proposed PTET election, as the use of resulting state credits would have created a substantial federal tax liability for the partners. BDO identified alternative planning opportunities across the multiple states, structured the transaction to minimize tax for nonresident partners, and uncovered approximately $500,000 in tax savings for the client. The vendor delivered this analysis within one week, providing critical peace of mind and establishing parameters for future tax filings.