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Uncertain Tax essay

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Uncertain Tax Position
The FIN 48 (now ASC 740-10) is an accounting requirement for all businesses in the
United States to disclose and analyze their uncertain tax positions (UTP). This regulation applies
to all businesses using the US GAAP (Generally Accepted Accounting Principles)
(Pricewaterhousecoopers [PWC] 14-17). Under this regulation, a business only recognizes an
income tax benefit if it highly likely it will materialize (more than 50% likelihood).
An uncertain tax position (UTP) refers to a tax position that is expected to be taken in a
future tax return by the company or the tax position of a previously filed return (Financial
Accounting Standards Board 18-21). Examples of UTP include decisions to exclude some
taxable income in a tax return or a decision to shift income between jurisdictions.
The objectives of FASB when issuing the FIN 48 interpretation were:
To clarify the accounting for uncertainty in income taxes recognized in a firms, books of
accounts
To prescribe the recognition threshold and measurement attribute in for the financials and
tax returns
Provide guidance for; tax derecognition and classification, tax on interest and penalties,
tax accounting in interim periods, tax disclosure, and tax accounting in transitions
(Financial Accounting Standards Board [FASB]b).

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Surname 2
To recognize the amount of taxes payable or refundable in the current year.
To recognize the deferred tax liabilities and assets for future taxation of events that are in
an entity’s financial statements or tax returns (Pricewaterhousecoopers [PWC] 39).
Temple-Inland Inc.
The company requested for a deferred tax refund of $562M from the IRS in 2009. It did
not receive any refund during this period. It also had a receivable related to tax credit of $281M.
Temple-Inland Inc. included a tax refund of $492 in its pre-tax book income. The company
recorded an unrecognized tax benefit related to tax benefit in its financial statements. The
company reserved a maximum potential benefit of 88.88% ($96/$108). In 2009, the net operating
loss for the company was $332M. The valuation allowances were $23M, and they pertained to
the net operating loss carryforwards. Finally, there was no large noteworthy differences between
book income and taxable income.
Weyerhaeuser Company
Weyerhaeuser Company requested for a deferred tax refund of $247M from the IRS in
2009. It received a tax refund during this period of $191M. It also had a receivable related to tax
credit of $55M. Weyerhaeuser Company included a tax refund of $18M in its pre-tax book
income. The company did not recorded an unrecognized tax benefit related to tax benefit in its
financial statements. In 2009, the net operating loss for the company was $842M. The valuation
allowances were $103M, and they pertained to the net operating loss carryforwards. Finally,
there was no large noteworthy differences between book income and taxable income.
Graphic Packaging Holding Company
Graphic Packaging Holding Company requested for a deferred tax refund of $217.5M
from the IRS in 2009. It received a tax refund during this period of $537.5M. It also had a

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Surname 1 Surname Tutor Course Date Uncertain Tax Position The FIN 48 (now ASC 740-10) is an accounting requirement for all businesses in the United States to disclose and analyze their uncertain tax positions (UTP). This regulation applies to all businesses using the US GAAP (Generally Accepted Accounting Principles) (Pricewaterhousecoopers [PWC] 14-17). Under this regulation, a business only recognizes an income tax benefit if it highly likely it will materialize (more than 50% likelihood). An uncertain tax position (UTP) refers to a tax position that is expected to be taken in a future tax return by the company or the tax position of a previously filed return (Financial Accounting Standards Board 18-21). Examples of UTP include decisions to exclude some taxable income in a tax return or a decision to shift income between jurisdictions. The objectives of FASB when issuing the FIN 48 interpretation were: ➢ To clarify the accounting for uncertainty in income taxes recognized in a firms, books of accounts ➢ To prescribe the recognition threshold and measurement attribute in for the financials and tax returns ➢ Provide guidance for; tax derecognition and classification, tax on interest and penalties, tax accounting in interim periods, tax disclosure, and tax accounting in transitions (Financial Accounting Standards Board [FASB]b). Surname 2 ➢ To recognize the amount of taxes payable or refundable in the current year. ➢ To recognize the deferred tax liabilities and ...
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