benchmarking

When a company is operating successfully and seeking liquidity—whether to fund growth or return value to shareholders—two primary pathways or “tracks” exist: the public market (IPO), and the private market (a sales transaction). 

The private market track can take several forms: 

• A full or partial sale to a strategic buyer 
• A full or partial sale to a private equity fund (a financial buyer)  
• A hybrid approach involving both strategic and financial buyers 

Why consider both tracks at once? 

Companies can increase their valuation by investing in the dual-track process. Private markets understand that well-run, high-growth, prepared companies have a public market option and can go either way. The primary advantage of this dual process is to maximize shareholder value. Additional benefits include: 

• Saving time and resources—running both tracks concurrently is more efficient than running them separately or in series 
• Managing bandwidth issues—by utilizing incentive units or other forms of compensation for key team members, and by outsourcing critical components of each process to experts 
• Preserving optionality—retaining the ability to cross tracks when the time is right creates additional value 

What goes into a dual-track process? 

Significant analytical and structural work is required to prepare for both tracks simultaneously. Key workstreams include: 

• Financial modeling across exit scenarios 
• Tax structuring to optimize shareholder outcomes 
• Obtaining bids from capital markets for either track 
• Pre-transaction readiness to ensure internal operations, reporting, and governance are prepared for scrutiny 

Consulting with your trusted advisors who are experienced with IPO readiness, capital raises, and M&A transactions early in the process is a great first step.  When feasibility level financial analysis steps are complete, shareholders and management can pursue and push further into the dual-track process. 

Managing the demands of due diligence 

Before initiating a dual-track process, detailed planning will be required to ensure the proper resources are in place—both to keep the company’s core operations running uninterrupted and to provide timely support to due diligence efforts.  

Due diligence for a sell-side transaction involves the company’s internal team providing a significant amount of data and responding to advisor inquiries, including: 

• Internal reporting 
• Contracts 
• Historical information about the company 

An IPO process includes all of this work, plus working with outside counsel to handle the regulatory and compliance requirements of the Securities and Exchange Commission (SEC). 

How BerryDunn can help 

If you are considering either an IPO or a minority/majority sale transaction, BerryDunn professionals can help you assess your options and build a clear path forward. Our services include: 

• Valuations based on a myriad of exit options  
• Private market sale readiness (Quality of Earnings)  
• Management's Discussion and Analysis (MD&A)  
• Governance and control assessments for the Public Company Accounting Oversight Board (PCAOB) and Sarbanes-Oxley (SOX)  
• Compliance consulting with respect to disclosure  
• Dual-track readiness scorecard construction 

Learn more about our services and team. 

Read this if you are a compliance officer, revenue integrity director, clinical documentation improvement specialist, clinical documentation and coding auditor, or telehealth provider at a healthcare facility or medical practice.

The telehealth field is steadily changing as federal policymakers aim to keep patient access open while shaping long-term regulations. The Consolidated Appropriations Act of 2026 (H.R. 7148), signed into law on February 3, 2026, brought the biggest changes by extending major Medicare telehealth benefits for most services until December 31, 2027. Additionally, the US Department of Health and Human Services (HHS) updated its telehealth guidance, confirming these extensions and ensuring that Medicare beneficiaries in all regions continue to have broad access. 

Summary of telehealth extensions 

The new law and updated federal guidance preserve several significant telehealth flexibilities: 

• Home as an originating site: Medicare beneficiaries may continue to receive non-behavioral telehealth services from their residences, without geographic limitations, through 2027. 
• Expansion of eligible providers: Physical therapists, occupational therapists, speech-language pathologists, audiologists, and other qualified clinicians remain authorized to deliver telehealth services under Medicare. 
• FQHCs and RHCs as distant-site providers: Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) retain the ability to provide telehealth services, enhancing access for rural and underserved communities. 
• Audio-only telehealth options: Certain services may still be delivered via audio-only communication, supporting patients without reliable broadband or digital devices. 
• Behavioral health flexibilities: The requirement for in-person visits for tele-mental health services is waived until January 1, 2028, allowing continued virtual access to behavioral healthcare. 

Compliance requirements for telehealth providers 

While the extensions offer substantial continuity, providers must stay vigilant in meeting federal compliance expectations: 

1. Maintain documentation standards: Telehealth sessions are required to comply with Medicare's documentation standards. These include verification of patient identity, specification of the modality utilized, documentation of patient consent where applicable, and comprehensive clinical notes. Extensions do not alter or diminish these documentation requirements. 
2. Use approved platforms: Providers are required to utilize HIPAA-compliant technology whenever feasible, despite the expiration of certain enforcement flexibilities implemented during the COVID-19 era. Accordingly, the use of encrypted and secure platforms remains imperative. 
3. Track modality requirements: Since audio-only is allowed for specific services, clinicians need to carefully follow Medicare guidelines and choose the right method for each service. It's important to stay up to date by checking CMS bulletins and HHS telehealth policy updates regularly. 
4. Monitor state-level rules: Although federal extensions cover Medicare, state-specific telehealth laws, licensure agreements, and prescribing rules can vary. Healthcare providers delivering care across multiple states need to make sure they follow all relevant regulations in each jurisdiction. 

BerryDunn can help 

Recent telehealth extensions show that both political parties continue to back virtual care, ensuring its stability until at least the end of 2027. Healthcare providers should take advantage of these new flexibilities while continuing to carefully follow updated federal and state regulations. 

Our healthcare compliance team can help. We incorporate deep, hands-on knowledge with industry best practices to help your organization manage compliance and revenue integrity risks. Learn more about BerryDunn’s healthcare compliance consulting team and services. 

Read this article if you are a CFO, business owner, tax director, controller, investor, or CTO at a company with research and development expenses, and you want to help ensure compliance while maximizing your tax benefits.  

The research and development (R&D) tax landscape is undergoing significant transformation in 2026. While some provisions restore previous benefits, others introduce heightened compliance requirements that demand immediate attention from businesses claiming R&D deductions and credits.

The return of immediate expensing

Beginning with tax years after December 31, 2024, the One Big Beautiful Bill Act (OBBBA), passed in July 2025, reverses the five-year amortization requirement for domestic research expenses that had been in effect since 2022. Companies can once again deduct domestic R&D costs immediately, restoring a critical cash-flow advantage and eliminating one of the most burdensome compliance challenges of recent years. 

However, this relief comes with an important caveat: foreign research expenses remain subject to 15-year amortization. Businesses must continue to maintain separate tracking systems to distinguish between domestic and foreign R&D activities—a requirement that adds complexity to what might otherwise seem like a straightforward regulatory rollback.

Heightened IRS scrutiny and documentation standards 

While immediate expensing returns, the documentation burden intensifies. The IRS has significantly increased its scrutiny of R&D claims, and this trend shows no signs of abating in 2026. Companies must now provide more detailed, specific explanations of their research activities, demonstrate how each project qualifies for the tax credit, and clearly link expenses to qualifying activities. 

The agency now expects documentation that is: 

• Specific and organized 
• Based on robust, contemporaneous data collection throughout the research process 
• Supported by comprehensive records that can substantiate claims 

With audit activity on the rise, insufficient or vague records carry substantially higher risk than in previous years. While year-end compilation of documentation remains acceptable, it must be grounded in thorough, ongoing data collection and record-keeping systems established during the actual research activities. The key is ensuring that supporting documentation is comprehensive and can withstand scrutiny, regardless of when it is formally assembled. 

Updated Form 6765 requirements

Critical reporting changes have been incorporated into Form 6765, which now requires more upfront disclosure. After years of reviewing weak refund claims and resolving disputes, the IRS has pushed for clearer descriptions, better substantiation, and greater transparency. As of 2026, these enhanced expectations are the standard. 

Businesses must provide a comprehensive explanation of their R&D components, activities, and qualified expenses with their filing—not after questions arise. While the IRS extended the transition period for meeting updated R&D credit documentation standards to January 10, 2026, this grace period doesn't soften the underlying requirements. The new standards are permanent, and claims that fail to meet them will face greater pushback. 

Retroactive relief for 2022 – 2024

The legislation doesn't ignore businesses that were forced to amortize domestic R&D expenses during 2022 through 2024. Companies can take advantage of retroactive relief by deducting all remaining unamortized amounts in 2025, or by splitting the deduction between 2025 and 2026. 

Small businesses—defined as those with average gross receipts of $31 million or less—receive an additional option: they can amend their 2022 – 2024 returns to apply immediate expensing retroactively. This window remains open until the earlier of July 4, 2026, or statute of limitations, providing small businesses with meaningful opportunities to recapture lost cash flow from prior years. 

Strategic implications 

The 2026 changes present a dual reality: improved cash flow through immediate expensing, coupled with a substantially more rigorous compliance environment. The financial benefit is clear, but it comes with strings attached. 

Companies that invest in robust tracking systems and maintain contemporaneous documentation will be best positioned to maximize available incentives while withstanding IRS scrutiny. Those who delay implementing stronger documentation practices risk disallowances, penalties, and significant compliance costs down the road. 

The message is clear: take advantage of the restored immediate expensing benefit but do so with meticulous attention to documentation. The era of informal R&D record-keeping is definitively over. 

Payroll tax credit for early-stage startups

For early-stage startups that may not yet have federal income tax liability, the Section 41(h) payroll tax credit provides an essential mechanism to monetize research activities immediately. A Qualified Small Business (QSB)—defined as an entity with less than $5 million in gross receipts for the current year and no gross receipts dating back more than five years—can elect to apply up to $500,000 of its federal R&D credit against the employer's portion of payroll taxes. 

Following the passage of the Inflation Reduction Act, this credit first offsets the 6.2% Social Security (OASDI) tax and then applies to the 1.45% Medicare tax. To secure this benefit, the election must be made on the company's timely filed income tax return using Form 6765, and the credit is subsequently claimed on a quarterly basis via Form 8974 attached to the payroll tax return (e.g., Form 941). 

Key eligibility summary 

Gross receipts: Must be under $5 million for the tax year 

Five-year rule: No gross receipts for any year preceding the five-taxable-year period ending with the current year 

Annual cap: Up to $500,000 (increased from $250,000 for tax years beginning after December 31, 2022) 

Duration: The election can be made for a maximum of five taxable years

Alternative minimum tax relief for pass-through entities 

For pass-through entities such as S corporations and partnerships, the Alternative Minimum Tax (AMT) was historically a major barrier to utilizing the R&D tax credit. Because the credit is part of the General Business Credit, it generally cannot be used to reduce a taxpayer's tax liability below their Tentative Minimum Tax (TMT). This often meant that business owners who fell into the AMT net would see their R&D credits trapped as carryforwards, providing no immediate cash-flow benefit. 

The eligible small business exception 

Since 2016, the Protecting Americans from Tax Hikes (PATH) Act has provided critical relief for Eligible Small Businesses (ESBs). R&D credits for an ESB are treated as "specified credits," meaning they can be used to offset both regular tax and AMT. This is a "look-through" provision for pass-through owners with specific requirements: 

Entity qualification: The entity must be a non-publicly traded corporation, partnership, or sole proprietorship. 

The $50 million test: The business must have average annual gross receipts of $50 million or less for the three preceding taxable years. 

Shareholder/partner level: For the credit to offset AMT at the individual level, the owner must also separately meet the $50 million gross receipts test for that taxable year.

The 25/25 limitation 

While the AMT relief is a significant advantage, it does not allow the credit to eliminate tax liability entirely. The credit remains subject to a general limitation designed to ensure taxpayers maintain a minimum level of tax payment. Specifically, the R&D credit cannot reduce your tax below a calculated threshold based on your tax liability. In practical terms, this means that even qualifying businesses will retain some tax obligation after applying the credit—it cannot reduce your tax bill to zero. 

Next steps for R&D tax planning 

The convergence of beneficial tax treatment with stringent documentation requirements makes 2026 a pivotal year for R&D tax planning. Companies should: 

• Review and strengthen R&D documentation processes immediately. 
• Implement contemporaneous tracking systems for all research activities. 
• Assess eligibility for retroactive relief opportunities. 
• Ensure clear segregation between domestic and foreign R&D expenses. 
• Update Form 6765 preparation procedures to meet enhanced standards. 
• Evaluate eligibility for the payroll tax credit if your startup qualifies as a QSB. 
• Determine whether your pass-through entity and its owners meet the ESB criteria for AMT relief. 

BerryDunn can help 

To ensure compliance and maximize your R&D tax benefits under the new 2026 framework, contact your BerryDunn accounting and tax advisors today. Learn more about our team and services.  

Read this if you are a manager, executive director, or CFO at a private foundation. 

Charitable organizations play a vital role in addressing social issues, supporting communities, and promoting public welfare. As part of their mission, these organizations often make direct charitable expenditures to fund projects, provide services, and support individuals in need. However, with the privilege of tax-exempt status comes the responsibility to ensure that funds are used appropriately and in compliance with regulatory requirements. One crucial aspect of this compliance is expenditure responsibility, a concept that ensures charitable resources are used for their intended purposes. 

In the third and final installment of our trilogy, we will follow the McQueen Family Foundation in making their charitable expenditures to ensure that they meet their qualifying distributions.

What counts as a charitable expenditure? 

A private foundation may spend money on a wide range of activities that support its charitable mission. The IRS allows expenditures that advance the foundation’s exempt purposes, including grants, program activities, and necessary administrative costs. 

All expenditures, whether grantmaking or operational, must be reasonable and necessary to advance the charitable mission. While the IRS does not define these terms precisely, foundations typically evaluate reasonableness by comparing expenses to those of similar organizations. 

Qualified expenditures may include: 

• Program‑related investments 
• Administrative expenses necessary to support grantmaking or charitable activities 
• Professional fees essential for compliance and operations 

Such expenditures also help satisfy the foundation’s annual minimum distribution requirement. 

Planning tip for private foundations 

Donating appreciated stock is a common and effective strategy for private foundations to fulfill their qualifying distribution requirements. When a private foundation donates publicly traded securities or other appreciated assets directly to a qualifying charitable organization, the transaction can count as a qualifying distribution, provided it meets all IRS guidelines. By donating stock, the foundation not only satisfies its minimum payout obligations but also avoids realizing capital gains, maximizing the value of the charitable gift. 

To ensure the donation is properly treated as a qualifying distribution, the foundation must transfer the stock outright to a public charity or another eligible recipient, without imposing restrictions that would prevent the recipient from fully enjoying the asset. The value of the distribution is generally the fair market value of the stock on the date of transfer, and appropriate documentation—such as transfer records and acknowledgment from the recipient organization—must be maintained for compliance. This approach allows foundations to leverage their investment assets for greater philanthropic impact while aligning with IRS requirements. 

Prohibited and taxable expenditures 

Not all spending is permissible. Certain expenditures are classified as taxable expenditures under IRC § 4945, and engaging in them can result in substantial penalties for both the foundation and its managers. 

Examples of taxable expenditures: 

• Lobbying or attempts to influence legislation 
• Political campaign intervention 
• Grants to individuals or organizations without following expenditure responsibility rules 
• Activities providing private benefit or self-dealing 
• Non-charitable purposes not aligned with the foundation’s exempt mission 

Expenditure responsibility: Ensuring proper use of funds 

Expenditure responsibility is a legal and ethical obligation imposed on charitable organizations, particularly private foundations, when paying grants and expenditures to entities that are not public charities. The purpose is to ensure that grant funds are used solely for charitable purposes and not diverted for personal or non-charitable use. 

The Internal Revenue Service (IRS) requires private foundations to exercise expenditure responsibility by following a series of steps when making such grants. By exerting all reasonable efforts and establishing adequate procedures that (1) see the expenditure is spent solely for charitable or other permissible purpose which it was made, (2) obtain full and complete reports from the grantee demonstrating how funds were spent, and (3) make full and detailed reports to the IRS a private foundation can be considered to be exercising expenditure responsibility. Failure to meet these requirements can result in penalties or loss of tax-exempt status.

Key steps in exercising expenditure responsibility 

1. Pre-grant inquiry: Before making a grant, the foundation must assess the grantee's ability to use funds for charitable purposes. This may involve reviewing the grantee's mission, financials, and past performance. 
2. Written agreement: The foundation must enter into a written agreement with the grantee, specifying the charitable purpose of the grant, prohibiting non-charitable uses, and outlining reporting requirements. 
3. Monitoring and reporting: The grantee is required to submit periodic reports detailing how the funds were used and the progress of the funded project. The foundation must review these reports to ensure compliance. 
4. Recordkeeping: The foundation must keep detailed records of the grant, the agreement, reports received, and any actions taken in response to issues or concerns. 
5. IRS reporting: The foundation must report the grant and its expenditure responsibility activities on its annual tax filings, such as IRS Form 990-PF. 

Best practices for charitable organizations 

To maximize impact and comply with legal requirements, charitable organizations should: 

• Develop clear policies for direct charitable expenditures and grants. 
• Train staff in compliance and expenditure responsibility. 
• Maintain transparent and accurate records. 
• Regularly review and update agreements and reporting procedures. 
• Engage with legal and financial experts as needed. 

The McQueen Family Foundation accepts grant applications to help them decide which organizations they should grant money to each year. The grant applications include the ways in which the grant funds will be used by the grantee. Once the McQueen Family Foundation approves a grant, there is a written contract where the grantee agrees to use the funds for the intended purpose. The contract also requires that the grantee submit a quarterly report detailing how grant funds have been spent. If the grantee ultimately determines that they cannot spend all the grant funds as intended, the remaining funds are returned to The McQueen Family Foundation. The foundation then includes these statements with their annually filed Form 990-PF for grantees that are not public charities. 

Strengthening your charitable expenditure compliance 

Charitable expenditures are central to a private foundation’s mission, but they must be made within a detailed IRS regulatory structure. Permissible expenditures include grants, operational activities, and reasonable administrative costs—all aimed at advancing charitable goals. Foundations must also adhere to annual distribution rules and avoid taxable expenditures that could trigger excise taxes and jeopardize their exempt status. By exercising expenditure responsibility, organizations not only comply with legal standards but also build trust with donors, beneficiaries, and the public. Adhering to best practices ensures that charitable resources make the greatest possible impact while safeguarding the integrity of the organization. 

Our nonprofit tax team has deep expertise in private foundation compliance and strategy and understands the unique challenges that come with tax planning, governance, and financial sustainability. We provide specialized guidance on IRS regulations, minimum distribution requirements, excise taxes, and complex accounting matters, ensuring foundations remain compliant while optimizing their financial strategies. Learn more about our team and services. 

On February 20, 2026, the US Supreme Court issued a ruling on Learning Resources, Inc. v. Trump, a case challenging President Trump’s authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). In a 6-3 vote, the US Supreme Court ruled that IEEPA does not permit the President to impose tariffs.

Tariffs imposed under IEEPA

Prior to this ruling, the Trump Administration imposed significant tariffs under IEEPA. This law authorizes the President to act to address any unusual or extraordinary foreign threat that endangers national security, foreign policy, or the economy in the US if a national emergency is declared. President Trump declared such an emergency on April 2, 2025, citing the trade deficit and illegal immigration. The subsequent tariffs include:

• 10% minimum tariff on most imports
• 50% tariff on copper, steel, and aluminum
• 20 – 40% tariffs on most goods from Brazil, India, Canada, Mexico, and China

How can importers request refunds?

These tariffs are estimated to generate $175 billion in refunds for affected importers. Although the Court’s decision does not provide guidance on how importers should be refunded for these previously paid tariffs, it is expected that a refund procedure will be established through either the US Court of International Trade or US Customs and Border Protection (CBP). To prepare for these refunds, importers should:

• Compile entries and payment records related to IEEPA duties.
• Submit CBP Form 19 protests within 180 days of each entry’s liquidation, if not done so already. This 180-day deadline may be waived when refund procedures are established.
• Prepare for possible litigation in the US Court of International Trade.

What's next? 

While this is a significant “win” for US importers, Trump has asserted that he will continue to impose tariffs via alternative statutes that allow him to act. While these statutes may authorize the President to impose tariffs, these authorities are limited by time-based restrictions or approval from other governmental parties.

How BerryDunn can help

Our dedicated audit, tax, and consulting professionals understand the impact of tariffs and can assist with developing strategies for refunds as they become available. Learn more about our team and services.