Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 17, Problem 2BCC
Basis for Conclusions Case 2: Uncertain Tax Positions and Examination Risk26
26Repnnted from the Ernst & Young Academic Resource Center with permission of the Ernst & Young Foundation. Copy right 2014. All rights reserved.
Scene 1:
Current guidance on uncertain tax positions requires that when an entity is making its assessment as to whether a tax position is more likely than not to be sustained, it must assume that the position will be examined by the relevant taxing authority and that the taxing authority has all the relevant knowledge and information (FASB ASC 740-10-25-6 and FASB ASC 740-10-25-7). There is some controversy over this decision Read paragraphs B17 through B22 in the BCs in FASB's Interpretation No 48.
What are the arguments of the opponents of this rule?
Scene 2:
What are the arguments of the proponents of this rule?
Scene 3:
Which position do you support? Explain
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Q.
Explain the difference between a regular decision by the Tax Court and a memorandum decision by this court.
Q.
Many Tax Court decisions end with the phrase, ``Decision will be entered under Rule 155.'' What does this mean?
Q.
Find the court decision Stuart Hirshfield v. U.S. (88 AFTR 2d 2001-7095). Use the Citator to evaluate the reliability of this court decision. Include a print out of your results. Explain how you located this information.
Q.
You are reviewing a client's file and notice that a previous tax return position was taken based on a reveune ruling. You want to examine the current status of the revenune to see if there have been any changes that will affect the client's position. Provide the cite for the following Revenue Ruling and note its current status.
Q.
A partner at your firm has called you into his office for some help with a client issue. The client has a transaction that involes S. 162. The partner would like you to determine if any revenue rulings has been…
When a company records a deferred tax asset, it may need to also report a valuation allowance if it is “more likely than not” that some portion or all of the deferred tax asset will not be realized.
Required:Access the FASB Accounting Standards Codification at the FASB website. What is the specific nine-digit Codification citation (XXX-XX-XX-XX) that describes the guidelines for determining the disclosure requirements pertaining to how a firm should determine whether a valuation allowance for deferred tax assets is needed?
Multiple Choice Qsn .You have to choose one answer.
1.Which of the following statements is correct?
a. Gains that are ordinary income will be assessable income under s .6-5 of ITAA 1997.
b. Gains will be ordinary income if they are the type of gains that courts of law consider to
be of an income character.
c. A gain that comes in regularly/periodically is more likely to be ordinary income than a
lump-sum gain.
d. Whether or not a gain arises from an illegal activity does not affect whether it is
ordinary income.
e. All of the above.
(2) Which of the following statements is correct?
a. Capital gains and capital losses arising from a CGT event are always assessed to the
individual partners of a partnership according to their interest.
b. partner can have more than one interest in a partnership asset.
c .There is a disposal of part of an interest in a partnership asset whenever a new partner
is admitted to a partnership.
d.All of the above
Chapter 17 Solutions
Intermediate Accounting
Ch. 17 - Prob. 17.1QCh. 17 - When will income tax expense and income taxes...Ch. 17 - Will permanent differences cause the effective tax...Ch. 17 - When do permanent differences arise?Ch. 17 - How are deferred tax assets and deferred tax...Ch. 17 - Prob. 17.6QCh. 17 - Prob. 17.7QCh. 17 - Prob. 17.8QCh. 17 - Prob. 17.9QCh. 17 - How does a firm determine the need for a valuation...
Ch. 17 - Prob. 17.11QCh. 17 - Prob. 17.12QCh. 17 - Prob. 17.13QCh. 17 - How does an entity account for uncertain tax...Ch. 17 - Prob. 17.15QCh. 17 - Prob. 17.16QCh. 17 - Do U.S. GAAP and IFRS classify deferred tax...Ch. 17 - Prob. 17.18QCh. 17 - Prob. 17.1MCCh. 17 - Prob. 17.2MCCh. 17 - Prob. 17.3MCCh. 17 - Prob. 17.4MCCh. 17 - Prob. 17.5MCCh. 17 - Prob. 17.6MCCh. 17 - Prob. 17.7MCCh. 17 - Prob. 17.1BECh. 17 - Income Taxes Payable. Limmox Company has...Ch. 17 - Permanent Differences. Simmox Company's income...Ch. 17 - Permanent Differences. Plimmox Company's income...Ch. 17 - Permanent Differences, Reconciliation of Statutory...Ch. 17 - Prob. 17.6BECh. 17 - Prob. 17.7BECh. 17 - Prob. 17.8BECh. 17 - Prob. 17.9BECh. 17 - Prob. 17.10BECh. 17 - Temporary Differences, Deferred Tax Liability....Ch. 17 - Temporary Differences. Deferred Tax Asset....Ch. 17 - Temporary Differences, Deferred Tax Asset. Using...Ch. 17 - Prob. 17.14BECh. 17 - Realizability of Deferred Assets. Maves, Inc....Ch. 17 - Prob. 17.16BECh. 17 - Prob. 17.17BECh. 17 - Change in Tax Rates, IFRS. Use the same...Ch. 17 - Prob. 17.19BECh. 17 - Prob. 17.20BECh. 17 - Prob. 17.21BECh. 17 - Prob. 17.22BECh. 17 - Prob. 17.23BECh. 17 - Prob. 17.24BECh. 17 - Prob. 17.25BECh. 17 - Prob. 17.26BECh. 17 - Prob. 17.27BECh. 17 - Prob. 17.1ECh. 17 - Prob. 17.2ECh. 17 - Prob. 17.3ECh. 17 - Prob. 17.4ECh. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Temporary Differences, Deferred Tax Assets and...Ch. 17 - Prob. 17.7ECh. 17 - Prob. 17.8ECh. 17 - Change in Tax Rates, Permanent Difference,...Ch. 17 - Prob. 17.10ECh. 17 - Prob. 17.11ECh. 17 - Net Operating Loss, Carryback. Phlash Photo Labs,...Ch. 17 - Net Operating Loss, Carryforward. Loggins Lumber...Ch. 17 - Prob. 17.14ECh. 17 - Prob. 17.15ECh. 17 - Net Operating Loss, Carryforward, Tax Rate Change....Ch. 17 - Prob. 17.17ECh. 17 - Prob. 17.18ECh. 17 - Prob. 17.19ECh. 17 - Prob. 17.20ECh. 17 - Uncertain Tax Positions. Lewis Eagle Corporation...Ch. 17 - Uncertain Tax Positions. Based on the information...Ch. 17 - Prob. 17.23ECh. 17 - Prob. 17.24ECh. 17 - Prob. 17.1PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Prob. 17.3PCh. 17 - Prob. 17.4PCh. 17 - Temporary Differences, Deferred Tax Liabilities,...Ch. 17 - Prob. 17.6PCh. 17 - Prob. 17.7PCh. 17 - Prob. 17.8PCh. 17 - Prob. 17.9PCh. 17 - Prob. 17.10PCh. 17 - Prob. 17.11PCh. 17 - Prob. 17.12PCh. 17 - Prob. 17.13PCh. 17 - Prob. 17.14PCh. 17 - Prob. 17.15PCh. 17 - Prob. 1JCCh. 17 - Prob. 1FSCCh. 17 - Prob. 1SSCCh. 17 - Prob. 2SSCCh. 17 - Scene 1: The concept of the deferred tax liability...Ch. 17 - Basis for Conclusions Case 2: Uncertain Tax...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which of the following may be relied on and cited as authority for a tax position taken on a client's return? A. A section from the Form 1120 instructions B. Revenue Ruling C. A section from the CCH Master Tax Guidearrow_forwardWhich of the following statements best describes the ASC 740 process for evaluating a company's uncertain tax positions? Multiple Choice ASC 740 requires a company to complete a two-step analysis every time it evaluates its uncertain tax positions. ASC 740 requires a company to complete Step 2 (measurement) in its evaluation of its uncertain tax positions only if it is more likely than not that its tax position will be sustained on its merits (recognition). ASC 740 allows a company to take into account the probability of audit by a tax authority in Step 1 (measurement) in its evaluation of its uncertain tax positions. ASC 740 allows a company to record a tax benefit from an uncertain tax position only if it is probable the benefit will be sustained on audit by a tax authority.arrow_forwardReview the new revenue recognition guidance issued by the Financial Accounting Standards Board http://www.fasb.org/jsp/FASB/Page/ImageBridgePagecid=1176169257359 and answer the following questions. What is the new standard as of ASC 606? What does that mean to you? What are the recommended steps companies should follow to achieve the core principle? How does this change current GAAP standards? Who is required to adhere to this new standard?arrow_forward
- q13 According to IFRS, which accounting policy may an entity apply to measure investment property in periods subsequent to initial recognition? Select one: a. Fair value model or revaluation model. b. Cost model or fair value model c. Fair value model only. d. Cost model or revaluation model.arrow_forwardInstructions: Using the FASB Codification, provide information from the ASC that answers the following questions. Provide codification references for your responses. When is a company allowed to initially recognize the financial statement effects of a tax position?arrow_forwardWhen a company records a deferred tax asset, it may need to also report a valuation allowance if it is “more likely than not” that some portion or all of the deferred tax asset will not be realized. The FASB Accounting Standards Codification represents the single source of authoritative U.S. generally accepted accounting principles. Required: 1. Obtain the relevant authoritative literature on disclosure requirements pertaining to how a firm should determine whether a valuation allowance for deferred tax assets is needed using the FASB’s Codification Research System at the FASB website (www.fasb.org). What is the specific citation that describes the guidelines for determining the disclosure requirements? 2. What are the guidelines?arrow_forward
- Performing Accounting Research When a company is uncertain as to the disposition of a tax position, it becomes a question as to the amount of tax benefit to recognize in the financial statements. Resolution of tax positions may take years. A company is trying to determine how to estimate the benefit to recognize related to an anticipated tax settlement with a taxing authority. What guidance is available in the Codification in reporting this information? FASB ASC 0 0 Check X x 0arrow_forwardS1: Only public entities are required to prescribe the accounting requirements of PAS 12 S2: Financial income is for external reporting purposes while taxable income is for compliance purposes Choices: True, False False, TrueFalse, FalseTrue, Truearrow_forwardWhen assessing realizability of deferred tax assets, management must consider positive and negative evidence. All of the following would be considered positive evidence except ________. Group of answer choices taxable income in prior carryback year(s) if carryback is permitted under the tax law future reversals of existing taxable temporary differences an excess of appreciated asset value over the tax basis of the entity's net assets unsettled circumstances that could adversely affect future operationsarrow_forward
- A valuation allowance for deferred tax assets Select one: a. Is required when future deductible amounts are expected to be applied against future taxable income. b. Requires evidence that it is more likely than not that none of the deferred tax asset will be realized. c. Is a contra asset account shown on the tax return. d. Is likely to be recognized if a company expects losses in early future years.arrow_forwardTRUE OR FALSE 1. PFRS 4 SUPERSEDES PFRS17 2.PFRS 17 APPLIES TO REINSURANCE CONTRACTS3.INCOME SERVICE IS RECOGNIZED IN OTHER COMPREHENSIVE INCOME4. PFRS17 APPLIES TO INVESTMENT CONTRACTS WITH DISCRETIONARY FEATURES REGARDLESS IF THE ENTITY ALSO ISSUES INSRANCE CONRACS OR NIarrow_forwardQuestion 1: Why do deferred tax assets or deferred tax liabilities arise? Explain your answer with a suitable example. Question 2: Will the existence of unused tax losses always lead to the recognition of deferred tax assets? Explain your answer with suitable example. Question 3: Do the liabilities and assets that are generated by using the 'balance sheet method' of accounting for tax appear to be consistent with the definition and recognition criteria of assets and liabilities promulgated within the Conceptual Framework? Question 4: Under what conditions can deferred tax assets be offset against deferred tax liabilities? Question 5: Critically examine the disclosures made by an Australian Securities Exchange (ASX) listed company in its latest financial statements and associated notes regarding income tax issues. While every company will have unique tax matters and position, your discussion should highlight the following: Identify the income tax expense (income) shown in…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College PubPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
How to (Legally) Never Pay Taxes Again; Author: Next Level Life;https://www.youtube.com/watch?v=q63F1pBrUHA;License: Standard Youtube License