Essay on Provision
Advanced Tax Accounting
18 November 2013
Income Tax Provision: Overview
Every company is obligated to file income taxes at the end of the year. This often happens when it reports a profit and needs to pay the taxes. There are also some instances when the company reports a loss and pays no tax. A provision on income taxes considers the possibility of both occurring and furthermore impacts the company’s net income calculation. The provision for income tax appears on the company’s final income statement. From there, the company can decide whether or not to pay their taxes all at once or make periodic payments on whatever the amount may be. “What the final income statement does …show more content…
Case on FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes:
In 2013, Wells Fargo found itself in trouble with the United States of America for not following the correct income tax procedure.
“42. FIN 48's plain language seems to require that its process applies to all “tax positions,” not just UTPs. (FIN 48 ¶¶A2, A19-20 (“Because of the difficulty of defining an uncertain tax position, the Board decided that all tax positions are subject to the provisions of this Interpretation.”).) Indeed, Wells Fargo's auditor, KPMG, acknowledged in its guide to the FIN 48 process that “FIN 48