Essay on Provision

845 Words Oct 23rd, 2015 4 Pages
CORPORATE INCOME TAX PROVISION

Advanced Tax Accounting

Professor Boucree

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
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Valuation Allowance Analysis—considers relevant information to determining if, it is more likely than not that some portion or all of DTAs will not be realized. 7. Special Areas for Deferred Income Taxes—covers areas that provide exceptions to normal rules of FAS 109 with respect to 1) items usually considered in DTAs and DTLs and 2) transactions where changes in DTAs and DTLs impact goodwill or equity accounts rather than income tax expense. 8. Financial Statement Reporting—proper reporting in Statement of Operation, Balance Sheet, Cash Flows and Statement of Changes in Stockholder’s Equity and Other Comprehensive Income 9. Income Tax Footnote Disclosure—directed at detailed disclosure of amounts and items in the income tax footnote to the financial statements.

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

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