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FIN 48
A major feature of the recently issued Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”) is the need to specifically quantify uncertain tax positions. For U.S. multinational corporations the tax impact of international operations is often the largest driver in achieving a global effective tax rate that is significantly different than the U.S. statutory rate. Among the major rate drivers are:
- Foreign tax rates that are substantially different than the U.S. rate;
- Interplay of the U.S. worldwide tax regime and complex foreign tax credit utilization rules;
- FAS109 deferred income tax recognition principles and the potential applicability of the indefinite reversal criterion of APB23;
- Subpart F income;
- Related party transactions subject to transfer pricing adjustments;
- Permanent differences relating to export tax incentives, R&D credits and the domestic production activity deduction; and
- Impact of foreign currency translation rates.
USTA’s engagement teams are experienced at preparing FIN 48 documentation for large corporations and dedicated to efficiency and responsiveness. The Vantage Point software is an extremely useful tool for modeling a company’s global tax position for financial statement purposes. Engaging USTA to prepare FIN 48 documentation will not raise independence concerns with the audit committee.