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FIN 48 Turns Two, and Certainly Isn’t All That Bad

Harvey L. Pitt | April 28, 2009

Back in the halcyon days of June 2006, the Dow was 11,000, unemployment was 4.6 percent, and our collective mood was best described by the title of the movie, “On a Clear Day, You Can See Forever.”

So, too, apparently, was the mood at the Financial Accounting Standards Board, which issued Financial Interpretation No. 48, Accounting for Uncertainty in Income Taxes, to a chorus of objections and predictions of its awful consequences. Objections and predictions notwithstanding, FIN 48 took effect, with last year the first year of status quo FIN 48 compliance. In these uncertain times, boards and managements should examine new options to ameliorate exposure to FIN 48’s sharp elbows.

According to FASB, FIN 48 was supposed to increase the relevance and consistency of income tax reporting. This was to be accomplished by imposing consistent accounting criteria and related disclosure obligations, where none (in the case of...

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