It questioned the reasonableness of requiring the disclosure of a gross unrecognized tax benefit
number in the notes to financial statements, given that this disclosure might provide a misleading measure of tax risk.
(39) FIN 48, supra note 31, at summary; see Jones, supra note 32, at 774 ("[I]nterest and penalties must be accrued on the unrecognized tax benefit
as if the position had been rejected."); see also Danielle E.
That means that a disclosure would likely be required in the 2007 annual report indicating that 50 percent of the company's unrecognized tax benefit
is likely to change within 12 months due to the lapsing of the underlying statute of limitations along with a description of the nature of the underlying issue.
The PEEC agreed with the staff that a member could assist an attest client with its application of FIN 48, provided the member is satisfied that the client understands the reasons why a specific tax position does or does not meet the MLTN threshold and the basis for the determination of the amount of related unrecognized tax benefits
Thus, although FIN 48 requires disclosure of more information about uncertain tax positions and unrecognized tax benefits
than FAS 5, the tax footnote in issuers' financial statements does not itself disclose sufficiently detailed information to permit tax authorities to issue information document requests.
If ASC 450 or 460 applies to what was previously an ASC 740 unrecognized tax benefit
, the reclassification would be a decrease in unrecognized tax benefits
reported in the tabular reconciliation.
* Accounting Standards Update 2009-06 modified the Codification to provide guidance for pass-through entities and tax-exempt not-for-profit organizations with respect to the definition of a tax position, attribution of income taxes to the entity or its owners, and the financial statements of a group of related entities, It also eliminated some disclosure requirements for these and other nonpublic entities with respect to unrecognized tax benefits
For example, it is often unclear whether the gross reserve for unrecognized tax benefits
includes or excludes accrued interest payable.
FIN 48-a would provide guidance on how an enterprise should determine whether a tax position is effectively settled for purposes of recognizing a previously unrecognized tax benefit
. On behalf of Tax Executives Institute, I am pleased to submit the following comments.
If the tax position relates to a timing item (i.e., the claimed tax benefit, if disallowed, would give rise to a deferred tax asset), a liability must be recognized for the unrecognized tax benefit
, but this FIN 48 liability will be offset by an increase to the corresponding deferred tax asset.
Non-GAAP income tax expense on non-GAAP earnings - Defined as GAAP tax expense excluding discrete items such as return to provision adjustments, stock based compensation, rate change impacts, new valuation allowances on new positions and changes in reserves for unrecognized tax benefits
Although the timing of the resolution and/or closure of audits is highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits
could significantly change in the next 12 months.