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SCO wants Tanner to do a new job: its tax returns
Wednesday, January 16 2008 @ 10:40 AM EST

Here's the motion:
311 - Filed & Entered: 01/15/2008
Motion to Approve (B)
Docket Text: Motion to Approve the Expansion of the Scope of Retention of Tanner LC to Prepare Tax Returns for the Debtors Nunc Pro Tunc to January 10, 2008 Filed by The SCO Group, Inc.. Hearing scheduled for 2/5/2008 at 10:00 AM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 1/29/2008. (Attachments: # (1) Notice # (2) Exhibit A # (3) Proposed Form of Order # (4) Certificate of Service and Service List) (Werkheiser, Rachel)

Tanner estimates that it will charge between $36,000 to $38,000 to do the federal and all the state taxes. That's on top of what Tanner has already done for SCO as accountants. It's $500 per additional state, according to the Engagement Letter, Exhibit A, so even with all the states listed, and there are several, it's still the federal that seems to be the costly item. That estimate is if there are no unexpected "issues." If anything unexpected crops up, that might require mo' money.

Note that there will be a hearing on this February 5th at 10 AM, but judging from the way bankruptcy works, I'm guessing it will be rubber stamped.

I'm remembering that at the 341 Creditors Meeting, Jean Acheson said SCO's state obligations were usually low, because they sell through distributors mainly, so that isn't the complex part, one would assume. You'll recall that Tanner was already hired to do the following tasks, as listed in the motion [PDF] to retain them:

Specifically, the Debtors respectfully request entry of an order pursuant to section 327(a) of the Bankruptcy Code approving Tanner to perform an audit of the Debtors' consolidated financial statements as of and for the year ending October 31, 2007, and to assist the Debtors in reviewing their financial statements and other documents in preparation for the necessary submissions to the Securities and Exchange Commission (the "SEC").

Tanner's role was "advisory only". It estimated in the motion that it would charge $196,000 for that job of auditing, $22,500 per 10-Q report, three of them, according to Tanner's third bill [PDF]. All other services billed at the customary rate, plus expenses. The motion was approved [PDF] retroactive to October 2007. Bankruptcy law allows you to hire one accountant, so on what basis would anyone say no?

And the first [PDF], second [PDF] and third Tanner bills duly arrived. The first one was for $28,499 and $450 in expenses. The second was even less, $19,001 plus $1,534 in expenses. No one objected to those interim bills. And the third bill was higher, $65,955 and $1,523 in expenses, and it was all about "audit services". I believe it's still waiting to see if anyone objects. They asked for an interim payment of $52,764 (80% of the allowed fee) and the expenses. Assuming their ability to project is good, we are looking, then, at $196,000 plus $36,000 to $38,000 more. Just trying to keep track of where all the money goes.

If you are curious about why they keep asking for 80%, it's because you don't need an order from the judge. It just sails on through. Of course, as Novell demonstrated recently, these are all interim bills. They can be challenged down the road.

Looking at the exhibits Tanner attached to the bills, where the tasks are broken down in a time sheet, the Exhibit A to the second bill lists the SEC audit, but also items listed as "General Audit", "Tax Accrual", and "Private Company Audit". The Exhibit A on the first bill lists in addition "SEC Reviews" and "Change Order". Presumably these tasks puts Tanner in position to know quite a lot about SCO's tax situation already. I don't know what company's normally pay to have their federal and state taxes prepared, but I hope the projected fee represents less than usual, given that Tanner already knows all SCO's inside financial information, presumably, and isn't starting from scratch. But here's my question. SCO is already off the Nasdaq. So what SEC Audit is this that Tanner's Exhibit A to the third bill shows them still working on in January?


  


SCO wants Tanner to do a new job: its tax returns | 78 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
SEC Audit
Authored by: rsteinmetz70112 on Wednesday, January 16 2008 @ 10:45 AM EST
Just because SCO is not listed on an exchange doesn't mean they aren't still a
public company and subject to SEC rules.

---
Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

Corrections here
Authored by: red floyd on Wednesday, January 16 2008 @ 10:45 AM EST
if needed.

Please state the nature of the corrections emergency.

---
I am not merely a "consumer" or a "taxpayer". I am a *CITIZEN* of the United
States of America.

[ Reply to This | # ]

  • Last paragraph, company's-->companies - Authored by: Balance on Wednesday, January 16 2008 @ 11:07 AM EST
  • PDF's all 404 - Authored by: Anonymous on Wednesday, January 16 2008 @ 11:15 AM EST
    • PDF's all 404 - Authored by: PJ on Wednesday, January 16 2008 @ 12:22 PM EST
  • tax return? - Authored by: Anonymous on Wednesday, January 16 2008 @ 07:27 PM EST
    • tax return? - Authored by: JamesK on Wednesday, January 16 2008 @ 08:47 PM EST
    • tax return? - Authored by: Anonymous on Wednesday, January 16 2008 @ 09:41 PM EST
      • tax return? - Authored by: Anonymous on Thursday, January 17 2008 @ 07:21 AM EST
      • tax return? - Authored by: Anonymous on Thursday, January 17 2008 @ 06:17 PM EST
        • tax return? - Authored by: Anonymous on Friday, January 18 2008 @ 12:27 PM EST
  • finanacial -> financial - Authored by: Anonymous on Thursday, January 17 2008 @ 09:10 AM EST
News Picks Comments Here
Authored by: red floyd on Wednesday, January 16 2008 @ 10:46 AM EST
Please put the name of the News Pick (from the right hand column) in the title.


---
I am not merely a "consumer" or a "taxpayer". I am a *CITIZEN* of the United
States of America.

[ Reply to This | # ]

Off-Topic here
Authored by: red floyd on Wednesday, January 16 2008 @ 10:49 AM EST
Off-topic only. Follow the instructions in red, and remember to make those
links clickable! <a href="http://www.example.com/">link
text</a>.

On-topic posts are not allowed, and either belong in the main thread, or in the
"off-off-topic" thread. On-topic punishment will consist of listening
to political analysts discussing the primaries.... oh wait, that's normal on the
tube now, isn't it? I guess I'll have to think pf a mew pme////

---
I am not merely a "consumer" or a "taxpayer". I am a *CITIZEN* of the United
States of America.

[ Reply to This | # ]

SCO wants Tanner to do a new job: its tax returns
Authored by: Anonymous on Wednesday, January 16 2008 @ 11:28 AM EST
Just 'cause you're off NASDAQ doesn't mean you're not public - as long as you
have a minimum number of shareholders (I think it's still 300) you are subject
to SEC regulations whether you're traded on an exchange or not.

[ Reply to This | # ]

SCO wants Tanner to do a new job: its tax returns
Authored by: Anonymous on Wednesday, January 16 2008 @ 12:08 PM EST
Who will get what's left? The Feds or Novell. Money owed the Feds can't be
discharged with bankruptcy, 11 or 7.

[ Reply to This | # ]

Audit Fees
Authored by: ralevin on Wednesday, January 16 2008 @ 04:11 PM EST
For those of you who are curious, the fees paid for audits, tax prep, etc. are
now in the proxy statement for public companies. This is an outgrowth of the
Arthur Andersen scandals. So if someone has older SCO proxies (which may be on
the web) you can see if there is a marked change.

Off the top of my head the numbers here don't seem unreasonable compared to
others I've seen. But those are generally larger companies. But SCO may be more
complex with the games they play, as compared to companies that just try to
produce a service or product, and make a profit at it.

[ Reply to This | # ]

  • Audit Fees - Authored by: Anonymous on Wednesday, January 16 2008 @ 08:42 PM EST
Hypothetically...
Authored by: Anonymous on Thursday, January 17 2008 @ 05:09 AM EST
If they were to inflate their fees by 25%, then ask for 80% of the inflated
fee...

No, perish the thought. I'm sure no ethical firm would even dream of doing
that.

[ Reply to This | # ]

SCO wants Tanner to do a new job: its tax returns
Authored by: philc on Thursday, January 17 2008 @ 09:53 AM EST
Tanner estimates that it will charge between $36,000 to $38,000 to do the
federal and all the state taxes. That's on top of what Tanner has already done
for SCO as accountants. It's $500 per additional state, according to the
Engagement Letter, Exhibit A, so even with all the states listed, and there are
several, it's still the federal that seems to be the costly item.


Here in MA the state tax form is based on (very similar to) the federal form.
Pretty much all data flows from the fed to the state. The major cost in doing
the taxes is getting the information together.

[ Reply to This | # ]

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