Accordingly, not only should the tax practitioner seriously consider whether Schedule UTP should be included with a return fifing (and how the uncertain tax position
should then be described and ranked on the Schedule UTP), he or she also must consider the above authorities related to tax positions taken in the return but not included on Schedule UTP.
SCHEDULE UTP DISCLOSURE REQUIREMENTS AND REPORTING OF UNCERTAIN TAX POSITIONS 682 A.
companies may be required to implement new international standards for income tax accounting, particularly when accounting for uncertain tax positions
The FASB's stated goal with FIN 48 was to reduce diversity in practice, and to that end it prescribes a specific model for recognizing and measuring uncertain tax positions
Depending upon the potential materiality of the uncertain tax position
, fieldwork standards would require an auditor to obtain whatever evidence necessary to support its conclusion about the accuracy of the account.
Once all uncertain tax positions
have been identified, FASB Accounting Standards Codification Subtopic 740-10 creates a two-step process to recognize and measure the tax benefits arising from those positions.
In the recognition phase, any intercompany transaction that could lead to an adjustment of income by the IRS or a foreign tax authority is considered to be an uncertain tax position
If the taxpayer's FIN 48 workpapers demonstrate that the taxpayer believed that a particular uncertain tax position
was likely to be sustained, then this fact would represent positive evidence that the taxpayer did in fact believe that its position was correct.
Under FIN 48, the recognition of an uncertain tax position
requires meeting a "more likely than not" threshold, meaning that there is more than a 50% likelihood that the position will be sustained if examined by a tax authority.
The schedule requires a concise description of each uncertain tax position
for which the taxpayer or a related entity has recorded a reserve in its financial statements, but does not require identifying the rationale and nature of the uncertainty of each disclosed position.
Federal corporate tax returns that meet an asset threshold test must file Form 1120, Uncertain Tax Position
The IRS has now received virtually all Schedules UTP, Uncertain Tax Position
Statement, that relate to tax years beginning in 2010 (TY 2010) and, as of March 2013, probably about two-thirds of Schedules UTP for tax years beginning in 2011 (TY 2011).