Tax Projects for SEC Registrants

Accounting for Income Taxes (FAS 109)

FAS 109 essentially requires a separation of "church and state" between public company auditors and public company tax preparers. Auditors are prohibited from performing/preparing tax provisions for their public company audit clients. Many public companies do not have the resources or expertise internally to do so on their own, so they must rely on other public accounting firms, such as PKM, to assist with this process.

We work with dozens of public companies on a project basis to assist with the tax accruals, tax provisions, and related FAS 109 computations and disclosures. For many of these companies we also prepare their tax returns. These clients benefit from our insightful solutions based on industry analysis and experience with other tax provision projects. Our tax professionals understand FAS 109 from the tax perspective, but also know how these calculations affect the accounting side of the equation. Accordingly, they can take these projects a step further and assist you with your Accounting for Uncertain Tax Positions or Financial Interpretation No. 48 (FIN 48) requirements.

Accounting for Uncertain Tax Positions (FIN 48)

FIN 48 is an interpretation of FAS 109, "Accounting for Income Taxes," that further increases the complexities and challenges of public company tax preparation. The objective of FIN 48 is to provide increased relevance and comparable financial reporting of income taxes by clarifying the treatment of uncertain tax positions for accounting purposes. FIN 48 requires public companies to evaluate their tax positions and to determine whether or not a benefit may be recorded. Under FIN 48, a benefit may be recorded when a tax position is "more-likely-than-not" sustained if the tax position is reviewed in a competent manner by the taxing authority. Even if a tax position meets this threshold, companies must still evaluate the sustainability of the tax position and provide a reserve if necessary. PKM works with public companies to assess the recognition threshold and the amount of related reserves for uncertain tax positions and to document the approach and how management came to its conclusions.