Case Studies for Book-Tax Differences in the Classroom
The Tax Adviser, Forthcoming
3 Pages Posted: 19 Dec 2013
Date Written: August 1, 2010
Financial accounting and tax professionals today face a bewildering maze of computational, disclosure, and reporting requirements related to income tax accrual. GAAP financial statements must comply with Accounting Standards Codification (ASC) Topic 740, Income Taxes (formerly FAS 109, Accounting for Income Taxes, and FIN 48, Accounting for Uncertainty in Income Taxes), which requires accruals for the tax benefit (liability) of temporary book-tax differences and footnote disclosure of uncertain tax positions. In addition, the effective tax rate footnote must disclose the tax benefit (liability) of permanent book-tax differences.
The IRS recently released Schedule UTP, Uncertain Tax Position Statement, which will also require corporate Schedule M-3 filers to provide a detailed analysis of current and prior tax year uncertain tax positions. These disclosure and reporting requirements raise questions as to how to most effectively cover book-tax differences in financial accounting and tax courses and how to prepare accounting graduates for this type of work in the profession.
Keywords: case study, utp, m-3, book-tax, 740-10, fin 48, uncertain tax position, permanent differences, temporary differences
JEL Classification: H21, H23, H25, E44, E62
Suggested Citation: Suggested Citation