Outcomes at a Glance

• $50M reduction in tax liability
• Successful out‑of‑court settlement
• Accurate reconstruction of historical software development cost
• Objective, defensible expert‑witness analysis grounded in industry productivity data

Context

A major transportation company inherited a large software portfolio during a merger and faced a substantial tax liability tied to the portfolio’s historical development cost. To challenge the assessment, the company needed a credible, quantitative estimate of what the software would have cost to build at the time it was originally developed.

Barriers

• No internal records detailing historical development cost
• Needed legally defensible calculations for an acquisition‑related tax dispute
• Required reconstruction of development effort using period‑appropriate productivity data
• Needed an unbiased expert witness to validate assumptions and establish credible cost boundaries

What QSM Delivered

QSM served as the organization’s expert witness, using:

• Historical productivity benchmarks from the era when the software was developed
• A size distribution representative of the acquired portfolio
• Parametric cost modeling with SLIM® methods to calculate likely development effort and cost

QSM produced a defensible cost estimate with clear quantitative boundaries, enabling the organization to demonstrate that the tax authority’s assumptions were overstated. The evidence allowed the client to settle out of court and reduce their tax liability by $50 million.