US GAAP ― uncertain tax positions

Produced by Tolley in association with

Corporation Tax

Guidance

This guidance note covers the aspects of ASC 740 which deals with accounting for uncertain tax positions. Previously this guidance was contained within the interpretation FIN 48.

Currently, the guidance under US GAAP is significantly more involved than under IFRS and also the level of disclosure of uncertain tax positions is far greater under US GAAP. See the IFRS Introduction guidance note for further guidance on uncertain tax positions under IFRS.

Asset rather than liability approach

When looking at uncertain tax positions, US GAAP looks at these from the perspective of tax benefits not recognised rather than liabilities provided for.

For example, suppose a filing position is taken on a tax return such that a deduction is claimed which reduces the tax payable by £100. On balance, it seems more likely that were the item examined then HMRC would prevail. The accounting analysis would be:

•
IFRS / UK GAAP ― a provision is made for £100
•
US GAAP ― there is a potential benefit of £100 which has not been recognised

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Malcolm Greenbaum

Director and Principal Trainer at Greenbaum Training and Consultancy Limited

Malcolm is a UK Chartered Accountant and Chartered Tax Advisor winning the John Wood Medal in the November 1995 CIOT sitting for the best paper on business taxation. He was previously Director of Finance and Taxation Programmes at BPP Professional Education and has delivered IFRS, US GAAP, UK Tax and VAT training (at all levels from an introduction to the complexities of IAS 39) to a multitude of organisations world-wide since 1992. Malcolm has particular experience in delivering bespoke training programmes to multi-nationals in the financial services, transport and energy sectors as well as delivering UK tax and VAT update programmes to accounting and law firms. He is passionate about training and his enthusiasm ensures that the participants enjoy the learning experience whilst gaining knowledge through their engagement in the sessions and through encouraging them to ask questions and discuss practical issues they may have. Malcolm also provides consultancy services to companies and accounting firms, including provision of VAT advice, reviewing accounting policy manuals and advising on accounting treatments of various transactions. In his spare time, Malcolm enjoys flying having gained a Private Pilot's Licence in 2014.

Popular Articles

Personal Tax

VAT on property disposals

VAT on property disposalsThis guidance note provides an overview of the VAT treatment of selling property that is located in the UK. The UK includes Great Britain, Northern Ireland and the territorial sea of the UK. The sale of any land or building located outside the UK is outside the scope of UK

14 Jul 2020 13:57 | Produced by Tolley Read more

Value Added Tax

Exporting goods ― proof of export

Exporting goods ― proof of exportIn addition to the requirements laid down in the Exporting goods ― overview guidance note, businesses intending to zero-rate exported goods must hold satisfactory evidence that the goods have been delivered to a destination outside of the UK. If satisfactory evidence

15 Dec 2020 14:02 | Produced by Tolley Read more

Owner-Managed Businesses

Allowable deductions for employee-related expenses

Allowable deductions for employee-related expensesThis guidance note covers the tax treatment of some common types of trading expenditure relating to employees. Some of these are disallowable under general principles, for example the wholly and exclusively test or capital versus revenue expenditure.

14 Sep 2022 09:49 | Produced by Tolley Read more

UU��ֱ��