FASB issues exposure draft proposing netting of unrecognized tax benefits when a net operating loss carryforward or tax credit carryforward exists

Tax Insights

The Financial Accounting Standards Board (FASB) released an exposure draft, "Presentation of a Liability for an Unrecognized Tax Benefit When a Net Operating Loss Carryforward or Tax Credit Carryforward Exists", on February 21, 2013 requesting comments by April 22, 2013. The exposure draft proposes that unrecognized tax benefits (UTBs) be netted against all same-jurisdiction deferred tax asset (DTA) net operating loss (NOL) and tax credit carryforwards, rather than only against DTA NOLs that are created by the UTBs. This proposal departs from the original guidance provided by the FASB staff, and currently reflected in the PwC "Guide to Accounting for Income Taxes". It proposes retrospective adoption (for all periods presented), while asking constituents whether that manner of adoption (in contrast with some form of prospective adoption) will present significant cost or other operational obstacles. The exposure draft does not require any new/additional recurring disclosures. We encourage individuals and organizations to consider commenting on the proposal.



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