{"apiVersion":"2026-10-19","data":{"disclaimer":"Educational. Not legal, tax, or financial advice.","resource":{"slug":"quality-of-earnings","title":"Quality of earnings, explained","audience":"buyer","summary":"What a QoE review is for, without inventing what one costs.","citations":[{"label":"IRS Publication 544","url":"https://www.irs.gov/publications/p544"}],"body":"This is educational. It is not an audit and not financial advice.\n\nA quality-of-earnings review is a buyer's or seller's look at whether the profit in the offering memorandum is the profit a new owner would keep. It is not a statutory audit. A CPA does it. NewHands's directory lists sample placeholders only — those firms are not real and are labeled that way.\n\nThe work usually covers revenue quality (one customer, one season, cash versus accrual), add-backs that will not recur, owner compensation versus a replacement manager, debt-like items (deferred revenue, gift cards, unpaid sales tax), and a working-capital peg so the buyer is not purchasing an empty checking account.\n\nAsk for the tie-out from the tax return to the SDE schedule. If an add-back has happened three years running, it is probably a cost, not an add-back. The worksheet on this site does the arithmetic. It does not decide which lines are legitimate."}}}