Restraint No More: Questions Posed to Gardere with Respect to Announcement 10-9


Note: Our responses are based on Announcement 2010-9 as well as subsequent comments of Service officials, but clear answers will generally not be forthcoming until there is specific guidance as to form and explanation. Accordingly, we generally have included a “presumably” to reflect our belief, subject to the above caveat.

  1. If we follow IFRS and not Fin 48, will this new form be required? 

Response: Presumably, the schedule will provide a standard of uncertainty. It seems unlikely that taxpayers following IFRS would be given a pass.

  1. Do you think the Service, when deciding which FIN48 issues to investigate further, will opt to review issues a company identified as 100% or 51%? (Regarding time/effort for the Service, going after 51% issues might be easier to overturn since the company already believes it’s only 51% likely to win, but may not provide as much additional tax compared to a 100% issue)

Response: The new disclosure would not have the FIN 48 materiality standard. We expect the IRS select issues based on magnitude and status under the Tiered Issue process.

  1. Will this form require any disclosure of state only FIN 48 issues?

Response: Only to the extent that the issue has an impact on the Federal return.

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