Get A Different Approach For Drafting Form Utp Disclosures - Tei

Corporations attaching a Schedule UTP must include a concise description of the uncertain tax position with (1) the relevant facts affecting the tax treatment of the position, and (2) information that identifies the tax position, its amount, unit of account, and the nature of the controversy or potential controversy.

Uncertain Tax Position Reporting Corporations filing Forms 1120, 1120-F, 1120-L, or 1120-PC must file Schedule UTP if total assets equal or exceed $10 million for the tax year and the corporation recorded a liability for unrecognized tax benefits for a tax position in audited financial statements.

Uncertain Tax Position Reporting Corporations filing Forms 1120, 1120-F, 1120-L, or 1120-PC must file Schedule UTP if total assets equal or exceed $10 million for the tax year and the corporation recorded a liability for unrecognized tax benefits for a tax position in audited financial statements.

The IRS defines a UTP as a position taken on a tax return for which the corporation or a related party has recorded a reserve in its audited financial statements. A UTP also refers to instances in which a company hasn't recorded a reserve for the position because it expects to litigate it.

But uncertainty is a double-edged sword: if they don't pass muster with taxing authorities, uncertain tax positions (UTPs) can materially impact your financial statements, and therefore your tax provision. That spells heightened risk for audits, financial restatements—and, of course, more uncertainty downstream.

ASC 740 includes rules for accounting for uncertain tax positions (UTPs).

Requirements for Filing Schedule UTP The corporation has assets that equal or exceed $10 million; The corporation or a related party issued audited financial statements reporting all or a portion of the corporation's operations for all or a portion of the corporation's tax year; and.