---
name: tax-scenario-modeler
description: "Generates scenario-based tax impact analysis for a business change — modeling 3-5 planning options across federal, state, and international dimensions with effective tax rate projections, cash tax comparisons, key risk flags, and a ranked recommendation. Use when evaluating the tax consequences of entering a new market, acquiring a company, restructuring an entity, or repatriating cash."
argument-hint: "[business-change] [current-structure]"
allowed-tools: ["Read"]
---

# Tax Scenario Modeler

## Purpose
Turn a proposed business change into a structured, decision-ready tax impact analysis — comparing multiple planning options side-by-side on effective tax rate, cash tax, and risk so the tax leader can recommend a path with defensible reasoning. Replaces one-off spreadsheet exercises and ad-hoc advisor memos with a repeatable modeling framework.

## When to Use
Invoke this skill when the user asks to:
- Model the tax impact of entering a new country or U.S. state market
- Compare tax structures for an acquisition or merger (asset vs. stock, entity placement)
- Evaluate an entity restructuring, IP migration, or supply chain reorganization
- Assess repatriation, dividend, or cash mobilization options
- Compare "do nothing" against 2-4 planning alternatives for a strategic change
- Prepare a tax scenario summary for a CFO, board, or steering committee

## Inputs Required
Before starting, collect:
- **Business change**: What is happening — new market entry, acquisition, restructuring, repatriation, IP move
- **Current structure**: Existing entity footprint, holding company jurisdiction, and where value/IP currently sits
- **Financial parameters**: Relevant revenue, taxable income estimates, deal value, or cash balances by jurisdiction
- **Jurisdictions in scope**: Countries and states involved, plus any treaty relationships that matter
- **Planning options to test**: Any specific structures the user wants compared (if none, generate reasonable alternatives)
- **Constraints**: Non-tax factors that limit options — legal, regulatory, operational, or timing
- **Time horizon**: Single-year impact or multi-year projection (default: 3-year)

If financial parameters are directional rather than precise, model with clearly labeled assumptions and flag sensitivity. This analysis is a planning aid, not a substitute for jurisdiction-specific advice or a formal opinion.

## Instructions

### Step 1: Frame the Baseline
Establish the "do nothing" scenario as the comparison anchor.
- State the current effective tax rate (ETR) and cash tax position given the existing structure
- Identify the tax attributes in play: NOLs, foreign tax credits, GILTI/Subpart F exposure, interest limitations (163(j)), BEAT exposure
- Note what changes automatically if the business change proceeds without any planning
This baseline is Scenario 0 and appears in every comparison.

### Step 2: Define 3-5 Planning Scenarios
Build distinct, realistic structuring options. Use the option set the user provided, or generate across these levers:
- **Entity placement**: Where the new operation, target, or IP is legally domiciled
- **Financing structure**: Debt vs. equity funding, intercompany loan pricing, thin-cap limits
- **IP and value chain**: Where IP is owned, licensed, or migrated; where profit is earned
- **Transaction form**: Asset vs. stock acquisition; taxable vs. tax-free reorganization; 338(g)/338(h)(10) elections where relevant
- **Timing**: Sequencing steps to preserve attributes or defer recognition

Name each scenario clearly (e.g., "Scenario B — Acquire via existing Irish holdco, stock deal").

### Step 3: Model Each Scenario Across Three Dimensions
For every scenario, work through:

**Federal / home-country layer**
- Taxable income impact, applicable rate, and any regime interactions (GILTI, FDII, BEAT, 163(j))
- One-time items: gain recognition, purchase price allocation, step-up amortization, transaction cost treatment

**State / sub-national layer**
- Nexus created or changed, apportionment shifts, state conformity to federal treatment
- Combined vs. separate filing implications

**International layer**
- Withholding taxes on cross-border flows, treaty relief availability, foreign tax credit utilization
- Local country tax on operations, CFC rules, Pillar Two / global minimum tax exposure (15% floor)
- Permanent establishment risk and transfer pricing posture

### Step 4: Quantify and Compare
Produce the core comparison table with a row per scenario and columns for:
- Projected ETR (steady state)
- Year 1 cash tax vs. baseline
- Multi-year cash tax over the horizon
- One-time tax cost (transaction/restructuring)
- Net present value of tax cash flows vs. baseline (if horizon > 1 year)

State every material assumption inline. Where a number is estimated, mark it and give the driver.

### Step 5: Flag Risks Per Scenario
For each scenario, list the top risk factors:
- **Substance / anti-avoidance**: Economic substance, GAAR, PPT, business purpose exposure
- **Transfer pricing**: Defensibility of profit allocation and intercompany pricing
- **Contested positions**: Areas likely to draw audit attention or require a reserve (uncertain tax positions)
- **Regime volatility**: Pillar Two, pending legislation, or treaty changes that could erode the benefit
Rate overall risk per scenario as Low / Medium / High with a one-line reason.

### Step 6: Rank and Recommend
- Rank scenarios on a blended view of tax efficiency and risk — not lowest ETR alone
- Name the recommended scenario with a 3-4 sentence rationale tying it to the user's constraints and time horizon
- Identify the single biggest sensitivity that could change the recommendation
- List the next diligence steps required before execution (advisor sign-off, transfer pricing study, legal review)

## Output Format
- **Structure**: Baseline framing → scenario definitions → per-scenario modeling → comparison table → risk flags → ranked recommendation
- **Length**: 1,000-1,400 words plus one comparison table
- **Format**: Structured document with a central comparison table; scenario detail in labeled subsections
- **Sections**: Baseline (Scenario 0) → Planning Scenarios → Federal/State/International Modeling → Comparison Table → Risk Flags → Recommendation & Next Steps
- **Tone**: Director of Tax briefing a CFO — precise, assumption-transparent, decision-oriented; quantified where possible, honest about uncertainty

## Quality Checklist
Before delivering output, verify:
- [ ] A baseline "do nothing" scenario is modeled and used as the comparison anchor
- [ ] 3-5 distinct planning scenarios are defined, each with a clear name and structure
- [ ] Every scenario is analyzed across all three layers (federal, state, international)
- [ ] The comparison table has a row per scenario and includes ETR, Year 1 cash tax, and one-time cost
- [ ] Pillar Two / global minimum tax exposure is addressed wherever cross-border structuring is involved
- [ ] Each scenario carries an explicit Low/Medium/High risk rating with reasoning
- [ ] A single ranked recommendation is made — not a menu without a pick — with the biggest sensitivity named

## Notes
- The lowest-ETR option is frequently not the right recommendation once substance risk and audit exposure are weighed — rank on the blend, not the headline rate
- Since Pillar Two took effect, structures that shift profit to sub-15% jurisdictions often deliver less benefit than the nominal rate suggests; always test the top-up tax
- When financial inputs are rough, model anyway with labeled assumptions — a directional comparison of structures is more useful to the decision-maker than waiting for precise numbers
- Flag clearly where a formal opinion, transfer pricing study, or local-country counsel is required before any position is taken

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## How to use this skill

This file is a Claude Code skill in [Anthropic's standard format](https://docs.anthropic.com/en/docs/claude-code/skills) — markdown with YAML frontmatter at the top.

**Installing in Claude Code:**
- `~/.claude/skills/<folder-name>/SKILL.md` — auto-loads in every session anywhere on your machine (recommended for skills you'll use across multiple projects)
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Restart Claude Code or open a new session to register.

**Using in Claude.ai, ChatGPT, Gemini, or other AI tools:**

1. Drag this file into a new chat, or copy and paste its contents
2. Send your task or request as your next message — the AI will apply the skill where it fits

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