By: Team Prestige Worldwide (PwC representatives)

Team members: Danielle Bonner Chen Chen Patrick Meehan Tram Nguyen James Parisi

PtP, LLC Analysis &

Recommendations

AgendaFactsTerminologyAssumptions3 issues to address:

Proposed timelineMelawia vs. NiawanIncentive package = Yes/No

RecommendationsQ&A

Summary of FactsUS based LLCTaxed as corporationPossibility = Locating intangible property

in a foreign country2 available options

Melawia Incentive packagePresidential election – tax reform

Niawan

Summary of FactsImportant tax information

 Melawia Niawa

nAlan Crites

Pierre Sampson

Incentive package

Deduction of gross income 0% 50% 25% 0%Corporate tax rate 15% 10% 14% 18%Tax on dividends from foreign subsidiaries No No No YesTax on intangible property transferred to foreign subsidiaries

No Yes Yes No

Deduction of gain on intangible property transferred to foreign subsidiaries

N/A 0% 25% N/A

TerminologyForeign subsidiary

Wholly or partly owned by parent companyA separate business entity

Tax on dividends from foreign subsidiariesDividends = Retained EarningsDividends received deduction => Decrease tax

amountTax on intangible property transferred to

foreign subsidiariesIntangible property = Peer-to-peer software

systemGain = Market value – Book value

Assumptions100% ownedIntangible property

No increase in value when transferredPartial transfer = Possible

Melawia’s presidential electionOnly two candidatesElection will occur in 2012Presidential term = 5 years

Incentive packageNo expiration dateDefer the starting date = Yes

Country Term lengthThailand 4 years

Taiwan 4 years

Japan 4 years

Malaysia 5 years

Indonesia 5 years

Vietnam 5 years

South Korea 5 years

Hong Kong 5 years

Singapore 6 years

Phillipines 6 years

Issue #1 – Proposed timelineRecommendation:

Stay in the US until 2014Move starting from 2015

Argument:Net losses in 2012 and 2013Losses can be used as tax benefits in 2014Election happening in 2012 => Uncertain

situation

Issue #1 – Proposed timeline (cont.)

“A net operating loss for any taxable year— (i) shall be a net operating

loss carryback to each of the 2 taxable years preceding the taxable year of such loss, and

(ii) shall be a net operating loss carryover to each of the 20 taxable years following the taxable year of the loss.”

- IRC 172 (b)(1)(A)2012 2013 2014 2015 2016

-200.00

0.00

200.00

400.00

600.00

800.00

1000.00

Net income/loss

Issue #2 – Melawia vs. NiawanRecommendation:

Melawia

Argument:Lower tax amount to be paidLess expensive laborHealthy foreign exchange reserves

Issue #2 – Melawia vs. Niawan (cont.)Calculation steps

Calculate income taxes

• Taxable income = Gross income - Deduction• Tax amount (1) = Taxable Income * Corporate tax rate

Calculate tax on gain

when transferred

• Total increase in value = Market Value – Book Value• Gain on transfer = Total increase in value * %

transferred• Tax amount (2) = (Gain – deduction)* corporate tax rate

Calculate total tax amounts

• Total tax = Tax amount (1) + Tax amount (2)

Issue #2 – Melawia vs. Niawan (cont.)

MelawiaNiawanCrites Sampso

n Incentive

Income (2015-2016) 1095 1095 1095 1095Deduction 0 547.50 273.75 0Taxable Income 1095.00 547.50 821.25 1095.00Tax Rate 15% 10% 14% 18%Tax Amount (1) 164.25 54.75 114.98 197.10Net Income 930.75 1040.25 980.03 897.90

Total increase in value of intangible property 0 0 0 0

% transferred 100% 100% 100% 100%Gain on transfer of intangible property 0.00 0.00 0.00 0.00

Deduction 0 0 0 0Taxable Gain 0.00 0.00 0.00 0.00Tax Rate 15% 10% 14% 18%Tax Amount (2) 0 0 0 0

Total Tax Amount 164.25 54.75 114.98 197.10

Issue #2 – Melawia vs. Niawan (cont.)

Crites Sampson Incentive Niawan0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Total Tax Amount

Issue #2 – Melawia vs. Niawan (cont.)

Crites Sampson

Incentive Niawan

0 164.25 54.75 114.975 197.1

50 164.25 59.75 120.225 197.1

100 164.25 64.75 125.475 197.1

150 164.25 69.75 130.725 197.1

200 164.25 74.75 135.975 197.1

250 164.25 79.75 141.225 197.1

300 164.25 84.75 146.475 197.1

350 164.25 89.75 151.725 197.1

400 164.25 94.75 156.975 197.1

450 164.25 99.75 162.225 197.1

500 164.25 104.75 167.475 197.1

Total tax amount

010

020

030

040

050

00

50

100

150

200

250

CSIN

Issue #2 – Melawia vs. Niawan (cont.)

Niawan

Melawia

Lower tax amount

Less expensive labor

Healthy foreign exchange reserves

More stable

High-tech hub

Issue #3 – Incentive Package Response

Incentive

No incentive

Pierre wins => Lower tax amount than incentive ($60.23)

Pierre is favored to win

Freedom to move

No employment requirements

Lower tax amount than Crites ($49.27)

100% certain

Recommendation SummaryMove in 2015MelawiaNo incentive package

Questions & Comments

Thank you!