Accounting for Income Taxes: Uncertain Tax Positions — Selected Topics (Portfolio 5003)

  • This Portfolio analyzes issues that arise due to FASB Interpretation No. 48, which addresses the accounting for uncertainty in income taxes in a company’s financial statements.


Bloomberg Tax Portfolio 5003, Accounting for Income Taxes: Uncertain Tax Positions—Selected Topics, analyzes issues that arise due to the accounting for uncertain income tax position rules in FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes. These rules originated in FASB Interpretation No. 48, Accounting for Uncertainty in Income Tax Positions—An Interpretation of FASB Statement No. 109, which addressed the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes.

A companion Portfolio, Bloomberg Tax Portfolio 5002, Accounting for Income Taxes: Uncertain Tax Positions, explains and illustrates the provisions in ASC 740 on uncertain income tax positions. One of these provisions requires that a company determine the interest and penalties that would accrue for an unrecognized tax benefit (i.e., a tax benefit that fails to meet ASC 740‘s recognition threshold and thus cannot yet be recognized in financial statements). This Portfolio explains the U.S. federal rules regarding interest and penalties for income tax deficiencies.

While the companion Portfolio explains the detailed rules for evaluating and measuring uncertain tax positions, this Portfolio discusses strategies for resolving uncertain tax positions with the IRS expeditiously to avoid many of these detailed rules that require considerable judgment to apply. It also discusses the IRS’s ability to obtain the tax provision audit workpapers and a company’s potential defenses to an IRS request for such workpapers. This Portfolio further explains many best practices in preparing for a financial statement audit of uncertain tax positions, and the rules and best practices in developing effective internal controls over the reporting of uncertain income tax positions.

This Portfolio may be cited as Bloomberg Tax Portfolio 5003, Dunbar, Walton & McEligot, Accounting for Income Taxes: Uncertain Tax Positions—Selected Topics (Accounting Policy & Practice Series).

Table of Contents

I. Introduction, Scope, and Purpose of Portfolio
II. Strategies for Resolving Uncertain Tax Positions Expeditiously
III. Dealing With Taxing Authorities That Request FIN 48 Workpapers
IV. Calculations of Interest and Penalties
V. Preparing for the Financial Statement Audit: Documentation Requirements
VI. Internal Control Considerations Under FIN 48

Amy Dunbar
Accounting Professor
University of Connecticut
Kathleen McEligot
Deloitte & Touche LLP
Rich Walton
Walton & Walton LLP
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