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.