ASC 740, formerly known as FIN 48 , offers guidance on uncertain tax positions. It is broad in scope and now applies to both nonprofit and for-profit entities.
What is FIN 48 analysis?
FIN 48 (mostly codified at ASC 740-10) is an official interpretation of United States accounting rules that requires businesses to analyze and disclose income tax risks . ... A business may recognize an income tax benefit only if it is more likely than not that the benefit will be sustained.
What does FIN 48 stand for?
In June, 2006 the Financial Accounting Standards Board issued Interpretation 48 of Financial Accounting Standard 109. This interpretation, known as “FIN 48”, is intended to eliminate inconsistency in accounting for uncertain tax positions in financial statements certified in accordance with U.S. GAAP.
Does FIN 48 apply to partnerships?
109, exists for income taxes, FIN 48 was designed to provide consistent application of FASB 109 . ... Its coverage includes all pass-through entities, such as general or limited partnerships, S corporations, LLCs, tax-exempt entities, sole proprietorships and single member LLCs. The key is GAAP Financial Statements.
What is uncertain tax positions?
In accounting, a situation in which a taxpayer believes its interpretation of earnings recognition is less strong than what the interpretation of the IRS is likely to be .
Who does FIN 48 apply to?
FIN 48 is effective for fiscal years beginning after December 15, 2006, is applicable to all enterprises subject to US GAAP (including non-profit enterprises) , and applies to all income tax positions accounted for in accordance with FASB Statement No. 109.
Is FIN 48 interest deductible?
Since the lawsuit’s settlement will not be deducted until payment is made (three to five years in the future), interest would accrue only after the first reporting period the tax return is due in which the deduction is taken on the tax return.
When did ASC 740 become effective?
740-10-55-140 In August 1991, a state amended its franchise tax statute to include a tax on income apportioned to the state based on the federal tax return. The new tax was effective January 1, 1992 .
What is ASC 740 tax?
Accounting for income taxes (ASC 740) is a set of income tax standards requiring public companies to analyze and disclose income tax risks . ... Complying with ASC 740 is challenging for public companies due to the knowledge and experience needed to meet the significant tax and financial reporting requirements.
Does ASC 740 apply to private companies?
Who does it apply to? The accounting for income taxes principles and requirements apply to domestic, foreign, public and private entities in the preparation of financial statements in accordance with U.S. GAAP. Non-profit organizations with activities that are subject to income taxes are also subject to ASC 740.
What amount of tax benefit can be recognized for a tax position that meets a more likely than not technical assessment?
If a tax position meets the more-likely-than-not threshold, it should be measured based on the largest benefit that is more than 50 percent likely to be realized.
What information must be disclosed in the disclosure notes to the financial statements for net operating loss carryforwards?
Disclosure Notes: NET OPERATING LOSS (NOL) CARRYFORWARDS. The amounts and expiration dates should be revealed for any net operating loss carryforwards. Remember, net operating losses can be carried forward for reduction of future taxable income for 20 years.
Under what circumstances is a deferred tax valuation account required?
Under what circumstances is a deferred tax valuation account required? When it is more likely than not that some portion or all of the deferred tax asset will not be realized .
What is an uncertain tax position FIN 48?
This interpretation, known as “FIN 48”, is intended to eliminate inconsistency in accounting for uncertain tax positions in financial statements certified in accordance with U.S. GAAP. FIN 48 mandates new rules for recognition, de-recognition, measurement, and disclosure of all tax positions.
What is a UTP in tax?
Schedule UTP (Form 1120) asks for information about tax positions that affect the U.S. federal income tax liabilities of certain corporations that issue or are included in audited financial statements and have assets that equal or exceed $10 million.
What is a tax position?
tax position means ‘ an assumption underlying one or more aspects of a tax return , including whether or not an amount, transaction, event or item is taxable; an amount or item is deductible or may be set-off; a lower rate of tax than the maximum applicable to that class of taxpayer, transaction, event or item applies; ...
