How Blue Chip Companies Fared Under FIN 48

Joseph M. Langmead, MBA, STD, CPA, and Kermit O. Keeling, JD, LLM (Tax), CPA

In June 2006, FASB Interpretation 48, Accounting for Uncertainty in Income Taxes (FIN 48; now codified as ASC [Accounting Standards Codification] 740-10) was issued to address perceived inconsistencies in practice in the accounting for the recognition of benefits of tax positions that were of uncertain sustainability in the event of examination by relevant tax authorities. SFAS 109, Accounting for Income Taxes (ASC 740), did not provide specific recognition and measurement criteria for such uncertainties. FASB had assumed—and popular perception had agreed—that FIN 48 would substantially impact the reporting of tax uncertainties.