Flashcards in Income Taxes Deck (34)
What 2 things should public entities disclose at the end of each annual reporting period presented on?
1. the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate
2. a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period, which shall include at a minimum
a. the gross amounts of the increases and decreases in unrecognized tax benefits as a result of tax positions taken during a prior period
b. the gross amounts of increases/decreases in unrecognized tax benefits as a result of tax positions taken during the current period
c. the amounts of decreases in the unrecognized tax benefits relating to settlements with taxing authorities
d. reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations
What is the indefinite reversal criteria for undistributed earnings of a subsidiary?
The presumption that all undistributed earnings will be transferred to the parent company may be overcome, and no income taxes need be accrued by the parent company, if sufficient evidence shows that the subsidiary has invested or will invest the undistributed earnings indefinitely or that the earnings will be remitted in a tax-free liquidation. A parent company must have evidence of a specific plan for reinvestment of undistributed earnings . If circumstances change and it becomes apparent that some or all of the undistributed earnings will be remitted in the foreseeable future, but income taxes have not been recognized by the parent co, it should accrue as an expense of the current period income taxes. It is not an extraordinary item.
Regulatory authorities require both stock and mutual savings and loan association to do what?
to appropriate a portion of earnings to general reserves and to retain the reserves as a protection for depositors. Provisions in the IRC permit a savings and loan association to deduct an annual addition to a reserve for bad debts in determining taxable income, subject to certain limitations. This generally differs significantly from the bad-debt experience on which determination of pre-tax accounting income is based. Thus taxable income and pretax accounting income of an association will usually differ.