PwC alternatives alert, October 2, 2008

FASB considers delay of FIN 48 for nonpublic entities


On October 1, 2008, the FASB voted to propose a deferral of the effective date of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), for certain pass-through entities. The FASB voted against a broader deferral that would have been applicable to all nonpublic entities.

The one-year deferral is expected to apply only to nonpublic entities that are pass-through entities for US federal income tax purposes. Therefore, while the proposed deferral would include alternative investment funds that are structured as US partnerships, it may not include those funds structured as offshore corporations. The exact scope will not be clear, however, until the proposals are made public.

The FASB also voted to propose a reduction in the FIN 48 disclosure requirements for all nonpublic entities. Specifically, the FASB will propose the elimination of the tabular reconciliation of unrecognized tax benefits and the disclosure of the amount of unrecognized tax benefits that, if recognized, would affect the effective rate.

The proposed FASB Staff Positions are expected to be released shortly and will be subject to a public comment period.

If the scope of the proposal does not include offshore corporations, management will continue to be required to assess such funds' uncertain tax positions under a FIN 48 model for December 31, 2008 year ends.

Specific advice and assistance may be sought from your PwC engagement team or from any of the partners in our Alternative investment funds group.