Accounting for Income Taxes: FAS 109 and FIN 48

Anchin’s Accounting for Income Taxes Group handles the specialized needs of FAS 109 and FIN 48 compliance so that our clients can focus on their bigger picture tax responsibilities. By assembling a group of former Big 4 tax experts at a regional firm, our team members understand our clients’ regional, national and international audit firms and provide them with the personal touch that Anchin affords to all of its clients.

Because FAS 109 and FIN 48 are designed to bring consistency in reporting income tax positions, a professional service firm not only has to be agile enough to coordinate its audit and tax departments but also has to have a firm grip on the various levels of tax jurisdictions. As a firm, Anchin’s seamless integration of audit and tax specialties (federal, state and international) are perfectly suited to carry out this work. The overall scope of FAS 109 services by Anchin’s professionals include:

• The validation of calculating current / deferred income tax account balances and determination of the potential income statement impact of potential adjustments to those accounts;
• Tax accounting for foreign operations;
• Preparation of tax basis balance sheets;
• Determination limitations on tax attributes (e.g. NOL, credits, etc.);
• Valuation allowance analysis;
• Income tax accounting for a business combination / purchase price allocation;
• Assessment of FAS 5 liability for non-income taxes (sales, personal property and real property taxes); and
• SOX 404 assessment, testing and remediation.

The complexities and challenges surrounding FAS 109 have been further increased by FIN 48, the Accounting for Uncertainty in Income Taxes. Although FIN 48 is intended to increase the comparability of financial statements, it also significantly increases the calculation and documentation requirements for individually identified income tax exposures. 

As it relates to the implementation of FIN 48, Anchin can assist companies with:

• Inventory of all uncertain tax positions in all jurisdictions (federal, state and international) in all open years;
• Determination of tax position:
• Whether it is “more likely than not” sustainable based solely on its technical merits (the “recognition” step), and
• The maximum amount that is more likely than not sustainable, in each uncertain tax position.
• Ongoing assessments of subsequent changes in judgment; and
• Preparation of draft footnote disclosures, including the reconciliation of beginning and ending amount of unrecognized tax benefits.

For further information about Anchin’s FAS 109 Services Group, contact Peter Baum, CPA, at 212.840.3456.