Companies taking an aggressive position on their tax returns will need to be more conservative and more consistent in reporting the benefit on their financial statements if a proposed position by the Financial Accounting Standards Board is finalized as drafted.
FASB issued a draft interpretation titled, “Accounting for Uncertain Tax Positions,” which says companies must meet a higher level of certainty that a tax benefit will pass muster with the Internal Revenue Service if they want to recognize the benefit on financial statements. Specifically, FASB says the tax position must meet a “probable recognition threshold,” which is loosely defined as certainty of about 70 to 75 percent.
