This course covers the disclosure requirements for uncertain tax positions of temporary and permanent differences between financial and tax accounting. Under Accounting Standards Codification (ASC) 740-10-50 (Financial Accounting Standards Board (FASB) Interpretation No. 48 (“FIN 48”)) a corporation must make a determination of the likelihood that one or more of its tax positions will be sustained upon review by the authorities. A footnote disclosure of those uncertain tax positions is required in the financial statements. A tax position taken on a current or previously filed federal tax return may also be subject to disclosure on Schedule UTP, Uncertain Tax Position Statement, which is filed with Form 1120, US Corporation Tax Return. Disclosure is required when either the corporation or a related party has recorded a reserve with respect to that tax position for federal income tax in an audited financial statement. Furthermore, if a reserve for that tax position was not recorded because the corporation expects to litigate its position, disclosure is also required.
This course covers the tax accrual process for an uncertain tax position when preparing the corporation’s financial statements and the requirements to adequately disclose an uncertain tax position on Schedule UTP.
A comprehensive example of Schedule UTP disclosures is provided to reinforce your knowledge of identifying and reporting uncertain tax positions for both financial accounting and tax accounting purposes.
Topics covered include:
- Determining what is an uncertain tax position for financial accounting purposes including:
- Recognition and measurement issues
- Determining which uncertain tax positions must be disclosed on the tax return including:
- Disclosure requirements of Schedule UTP
- Overlap between Form 8275 and Schedule UTP disclosure requirements
Course Series
This course is included in the following series:
7 CoursesReporting and Compliance for Book-Tax Differences
- Schedule M-1 Disclosure of Book-Tax Differences after 2017
- Corporate Tax Filing: Schedule M-3: Part I: Compliance and Reporting Issues
- Corporate Tax Filing: Schedule M-3: Part II: Compliance and Reporting Issues
- Corporate Tax Filing: Schedule M-3: Part III: Compliance and Reporting Issues
- Corporate Tax Filing: Schedule M-3: Additional Reporting in Parts II and III
- Corporate Tax Filing: Schedule M-3: Reporting Requirements for a Consolidated Group
- Uncertain Tax Positions: Tax Reporting Requirements after 2017
Learning Objectives
- Discover why Schedule UTP, Uncertain Tax Position Statement, is required of all corporations with total assets less than $50,000,000 that have one or more uncertain tax positions on the federal tax return.
- Explore what an Uncertain Tax Position is for financial and tax accounting purposes.
- Recognize the definition of an uncertain tax position under Accounting Standards Codification (ASC) 740-10-50 (Financial Accounting Standards Board (FASB) Interpretation No. 48 (“FIN 48”)), and identify recognition and measurement tests.
- Discover concepts related to tax accrual for an uncertain tax position, including uncertain temporary differences, uncertain permanent differences, and examples of tax accruals.
- Discover the Schedule UTP reporting requirements, including uncertain tax positions exempt from Schedule UTP and common uncertain tax positions disclosed on Schedule UTP.
- Discover Schedule UTP disclosure requirements, including:
- Comparison of Form 8275 and Schedule UTP disclosure requirements
- Schedule UTP, Part I, Uncertain tax positions for current tax year
- Primary Internal Revenue Code (IRC) sections
- Timing code (Temporary or Permanent)
- Pass-through entity disclosures
- Disclosure of major tax positions
- Ranking of tax position
- Examples of part I disclosures
- Schedule UTP, Part II, uncertain tax positions for prior tax years
- Understanding when part II is required
- Examples of part II disclosures
- Schedule UTP, Part III, concise description of uncertain tax positions.
- What must be included in the description
- Examples of acceptable and unacceptable description
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Prerequisites
A basic understanding of accounting for temporary and permanent differences for financial and tax reporting is required for this course. Completion of the other courses in this series is recommended.