Tax indemnification arrangements: Navigating the financial reporting

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Tax accounting insights 11/16/2010 by Tax accounting services
Tax indemnification arrangements: Navigating the financial reporting

At a glance

Income tax indemnifications are established in a variety of transactions, including business acquisitions, corporate spin-offs and initial public offerings (IPOs). Accounting for an income tax indemnification arrangement depends upon whether the company is obligated to the taxing authority, the relationship between the parties and the type of transaction.

This paper provides a framework to apply in determining the appropriate accounting.