Review: Uncertain Tax Positions

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来自 University of Illinois at Urbana-Champaign 的课程

Accounting Analysis II: Measurement and Disclosure of Liabilities

18 个评分

University of Illinois at Urbana-Champaign

Accounting Analysis II: Measurement and Disclosure of Liabilities

18 个评分

课程 3（共 5 门，Specialization Financial Reporting）

This course is the third course in the five-course Financial Reporting Specialization. This course begins with a discussion of current liabilities and contingencies and continues with long-term debt and bonds. The course next explores accounting model for leases, both lessees and lessors, and a discussion on deferred tax assets and liabilities. Participants will learn the latest accounting standards including the new accounting model for leases effective for public companies in 2019 and private companies in 2020.

从本节课中

Module 8: Review and Evaluation

This module will be a review of the previous seven modules. This will include the concepts of: current liabilities, contingencies, bonds, discounts and premiums of bonds, troubled debt restructuring types, lease determinations and classifications, lease modifications, sale and leasebacks, deferred tax liabilities and assets, carrybacks and carryforwards, and uncertain tax positions.

Review: Uncertain Tax Positions3:30

与讲师见面

John Hepp
Clinical Assistant Professor of Accountancy
Department of Accountancy

[MUSIC]

Welcome back in this, our final review lesson,

we'll talk about uncertain tax positions.

Now, remember the accounting issue is when to recognize the deduction and

how to incorporate uncertainty into the measurement of the deduction.

So we talked about the taxes two step.

This is not a fair value recognition,

which would be a one step recognition problem.

Instead we're going to look and

see whether an uncertain tax position meets a recognition threshold.

In other words, whether it will be more likely than not

that a tax position will be sustained upon examination.

And we will do that based upon evidence,

based upon the technical merits of the position.

We talked about the unit of account and

how that can lead to differences in the amount of tax benefit recognized.

How you aggregate the particular uncertain tax positions and

how you expect the tax authority to examine them and consider them, as well.

We talked about what if it doesn't meet the criteria for recognition,

doesn't meet that recognition threshold in the initial period?

We can look to future periods.

And when do we recognize it then?

Well, it would be either if, in some future period, that threshold is met,

the more-likely-than-not recognition threshold, or the tax matter

is settled with the authorities through negotiation or litigation or whatever.

Or the statute of limitations expires and there's

no longer any possibility that it's going to be denied by the tax authority.

Then we looked at, how do we measure it?

Once we've decided that it meets to threshold, how do we measure the amount of

the benefit from this deduction that we're going to put on our tax return?

How do we measure it for gap purposes?

Well, for gap purposes, we'll recognize the largest amount of benefit that is

greater than 50% likely of realization upon ultimate settlement.

So if I measure at the largest amount that's more likely than not there'll be

some that I don't measure.

And there'll be other uncertain ones that didn't meet the recognition threshold.

What about those?

Well, I've claimed them on my tax return.

I've taken the deduction.

I've recognized a liability for those amounts.

I'm also going to recognize interest on that liability at the statutory rate, why?

This is considered to be a potential liability if these are denied

by the tax authority.

So I'm going to accrue interest up to the point where it becomes more

likely than not that it will be accepted or it's negotiated away or

the statue of limitations expires.

Penalties, too, now penalties usually apply in more extreme situations,

if there's a minimum statutory threshold to avoid payment of penalties.

But if you exceed that, you would also accrue penalties throughout the course.

So that concludes our discussion of uncertain tax positions.

That you will not recognize a tax position until it meets a recognition threshold.

You'll measure it at the largest amount.

It's more likely than not you do recognize the liability when you either meet

the threshold for recognition of the benefit or the statute or

limitations is expired.

Or you've come to an agreement with the tax authority.

Thank you very much.

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