KPMG LLP’s professionals utilize their extensive experience and proprietary technologies to assist clients with loan accounting and tax reporting. Our services include model development for:
The 2008 financial crisis has placed many companies in the position of having acquired loans or debt securities in a purchase business combination subject to ASC 805 (FAS 141 R), including combinations done as FDIC-assisted transactions. Often with these transactions, the expectation is to receive less cash flow than the contractual cash flows of the loan due to evidence of credit deterioration of the borrower, which triggers the accounting for these loans and securities under ASC 310-30 (SOP 03-3).
KPMG’s effective yield model system includes:
The 2008 financial crisis has created serious economic stresses within the consumer finance industry. One means to mitigate potential damages is through loan modification. This approach offers distressed borrowers assistance by restructuring their loans with more favorable terms. It also helps preserve the lender’s investment which could otherwise be lost through default.
Performing such modifications, however, carries the possibility of side effects that result from the current tax law. While modifications can mitigate economic distress, they also have the potential to trigger the realization of capital gains or losses, as well as Original Issue Discount (OID). Thus, a well-prepared institution needs to be able to perform the tax computations associated with any loan modifications that are made. KPMG professionals can assist clients with the following loan modification functions: