Accounting

Accounting for Income Taxes: Managing Uncertain Tax Positions Under ASC 740 and ASC 450 — A Practical Guide (Portfolio 5005)

  • Bloomberg Tax Portfolio 5005, Accounting for Income Taxes: Managing Uncertain Tax Positions Under ASC 740 and ASC 450.

Description

Bloomberg Tax Portfolio 5005, Accounting for Income Taxes: Managing Uncertain Tax Positions Under ASC 740 and ASC 450 – A Practical Guide (Accounting Policy and Practice Series), provides a comprehensive and holistic analysis of how to properly account for and strategically manage a Portfolio of uncertain tax positions. This Portfolio begins with an overview of what constitutes a tax based upon income, the entities covered by the income tax accounting rules, and an overview of the Flaw of Averages – how non-linear items impact forecasts and models of uncertain numbers. The Portfolio continues with a discussion of how to generate an inventory of uncertain income tax positions and addresses the differences between a valuation allowance analysis and an uncertain income tax position analysis. The Portfolio then covers in detail the recognition and measurement steps under ASC 740 and associated matters.

Separate analysis sections are also included for later period changes to recognition and/or measurement (contrasted with ASC 450 Type 1 and Type 2 subsequent events); accrual of interest and penalties; balance sheet classification and disclosure considerations; specific transaction considerations; privilege and work product doctrine and related matters; and federal income tax return disclosure requirements. The Portfolio also includes a discussion of how to build tax models and stress-test them. The Portfolio is supplemented with a series of interactive Monte Carlo Simulation models of uncertain tax positions with which the user may experiment by changing various inputs and assumptions to run thousands of trials and simulate distributions of potential outcomes on a portfolio basis. These models can aid in understanding the rules associated with tax positions and in managing cash in anticipation of future tax payments.

This Portfolio is a practical guide for companies that must identify, assess, and report uncertain tax positions. Detailed technical rules regarding accounting for income taxes can be found in the following Portfolios:

  •  5000, Accounting for Income Taxes FASB ASC 740 (Accounting Policy & Practice Series)
  •  5001, Accounting for Income Taxes Fundamental Principles and Special Topics (Accounting Policy & Practice Series)
  •  5002, Accounting for Income Taxes: Uncertain Tax Positions (Accounting Policy & Practice Series)
  •  5003, Accounting for Income Taxes: Uncertain Tax Positions-Selected Topics (Accounting Policy & Practice Series)
  •  5004, Accounting for Income Taxes: Uncertain Tax Positions in Transfer Pricing (Accounting Policy & Practice Series)

This Portfolio may be cited as Bloomberg Tax Portfolio 5005, Salama, Accounting for Income Taxes: Managing Uncertain Tax Positions Under ASC 740 and ASC 450 – A Practical Guide (Accounting Policy & Practice Series).

Table of Contents

I. Scope of ASC 740
II. ASC 450 Standard for Non-Income Tax Matters
III. Introduction to the Uncertain Tax Position Rules in ASC 740 (Former FIN 48)
IV. Generating an Inventory of Uncertain Tax Positions
V. Differentiating Between a Valuation Allowance Analysis and an Uncertain Tax
VI. Step One: Recognition
VII. Step Two: Measurement
VIII. Later Period Changes to Recognition and/or Measurement
IX. Interest and Penalties
X. Balance Sheet Classification and Disclosures
XI. Considerations in Business Combination Transactions
XII. Privilege, Work Product Doctrine and Related Considerations
XIII. Tax Return Schedule UTP Disclosure
XIV. Steps to Building a Basic Tax Model & Non-Monte Carlo Means of Conducting

Michael_Salama
Michael Salama
Vice President & Lead Tax Counsel
Walt Disney