The Financial Accounting Standards Board published a draft of a proposed interpretation, "Accounting for Uncertain Tax Positions," yesterday. The draft seeks to reduce the diversity in practices associated with recognition and measurement in the accounting for income taxes.
The measure would apply to all tax positions accounted for in accordance with FASB Statement No. 109, "Accounting for Income Taxes."
"While, generally, the validity of a tax position is a matter of tax law, in some cases that law is subject to significant and varied interpretations resulting in diverse and inconsistent practices relating to the financial statement recognition of the benefits of uncertain tax positions," said FASB board member Edward W. Trott, in a statement.
The draft requires that a tax position meet a "probable recognition threshold" for the benefit of the uncertain tax position to be recognized in financial statements. The threshold is to be met assuming that tax authorities will examine the uncertain position.
The exposure draft is open to comment for the next 60 days. Letter can be submitted electronically or by mail. More information is available at the FASB Web site, www.fasb.org.
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