"FIN 48 clarifies the guidelines for accounting of uncertainty in income taxes on financial statements of enterprises per FASB Statement No. 109, Accounting for Income Taxes, and removes uncertain income tax positions from the guidance provided under FAS 5, Accounting for Contingencies."
The Financial Accounting Standards Board's oversight organization announced May 20 that it will test a new review process for existing standards with an analysis of FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes."
In Canal Corp, supra, the Tax Court recently held that a corporation's 1999 transfer of a wholly owned subsidiary to a joint venture was a disguised sale that required the company to include in capital gain the amount realized in the year of sale on its consolidated federal income tax return.
The Tax Court, applying the Chevron "deference" for Service issued interpretative regulations test, held that the 6664 definition of underpayment is ambiguous but that Treas.
While the government has for the most part successfully attacked tax products or tax-motivated strategies that were in vogue in the late 1990s and in the 2000s, there were many cases that the Service did not get the chance to audit and thereby escaped unscathed by passage of the statute of limitations and there were also some instances where the Service suffered a judicial defeat.
In Robinson Knife Manufacturing Company and Subsidiary v Commissioner, __F3d__(3192010), the Second Circuit, as set forth in the opinion of Judge Calabresi, held that the petitioner-appellant should be allowed to deduct sales-based trademark royalty payments instead of being required to capitalize such costs as was the decision of the Tax Court below, T.C. Memo 2009-9 and the government’s position throughout.