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The year 2009 will be the first time that most not-for-profit organizations will have to address the tax positions and approaches that can be taken to meet the FIN 48 requirements. It is apparent there are primarily two types of tax positions to be considered in FIN 48. The first and most critical is the continued qualification as a tax-exempt organization. The second tax position is whether there are unrelated business income (UBI) activities conducted that would be taxable. In addition to considering whether a type of revenue is UBI or not, a follow-on tax position is determining the expenses allocable as a deduction against the UBI income. A best practice would be to view FIN 48 as an opportunity to provide the board of directors and executive management with a fresh look at the tax positions taken, and inventory the positions along with their relevant authority so that they can know where they have tax exposures, if any. The recognition step for each tax position evaluates whether it meets the more likely than not standard - that is, whether there is a greater than 50% chance that the position will be sustained on examination by the taxing authorities, assuming that the tax authority will examine the technical merits of each tax position. The footnotes to the financials are required to disclose the impact of FIN 48.
Ready for FIN 48? Joseph S DeTrane California CPA; Jun 2009; 77, 10; Docstoc pg. 16 Reproduced with permission of th
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