Mark-to-Market Services

Mark-to-Market ("MTM") is a tax saving opportunity created by a Treasury regulation finalized in 1997. Section 475 of the Internal Revenue Code allows corporate tax payers meeting certain criteria to accelerate expenses associated with marking to market the company’s accounts receivables ("AR"). This acceleration of tax deductions may result in substantial benefits to corporate taxpayers with relatively large accounts receivable balances. A MTM project creates opportunities to minimize or defer federal and state taxes and to maximize after-tax cash flow through specialized valuation of accounts receivable and other securities.

The benefits of a MTM project vary according to the subject company’s federal and state taxable income. Actual benefits are dependent upon following characteristics:

	Accrual accounting method for financial and tax reporting purposes.
	Magnitude of actual bad debts.
	Non-financial company (not a "dealer" under IRC 475).
	Deferred payment or credit sales terms.

The benefit’s net present value can be reasonably estimated based on our review of tax returns and financial statements and our experience with over $1 billion in accounts receivable. The following are guideline Net Present Value ("NPV") savings for a hypothetical $10 million in accounts receivable:

Our MTM analysis follows valuation and federal income tax cost-estimating procedures and is structured to provide a clear and detailed audit trail. We review AR balance, AR terms, credit terms, bad debt expense, financial statements, and tax returns to estimate the fair market value of accounts receivable.

Adams Capital’s professionals are experts in providing mark-to-market services. Our backgrounds in finance, accounting, taxation, and law, and our experience with over 2,000 public and private transactions, allow us to provide credible valuation conclusions.

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