VideoMarie Leone, CFO.com | US
May 22, 2007
- Fin 48 Hocus Pocus
Fin 48 is bad accounting.Recording a partial tax position based upon probabilistic estimates that the tax authorities will not prevail is seriously flawed. I can calculate probablities of dice rolls because I possess all the known variables. However, I cannot calculate probabliites of prevailing against the tax authorities. The FASB concluded that measurement should rely on management's experiance in similar matters with the relevant taxing authority. The measurement is based on an analysis of the distribution of potential outcomes and their related probablities. What experiance does most management have is these matters?
It has been my experiance that either you prevail in a tax position or you don't. The notion that I should reflect a partial tax benefit or liability because I would be willing to settle with a tax authority for less is absurd. I agree that upon a tax audit challenge , management must make decisions whether to settle for reasons of expediancy or to save the time and cost of the battle, but that decision to settle has very little to do with the tax postion it took on its return and more to do with how to best spend it's time and money dealing with current business at hand instead of with an agressive tax authority for months or years to come.Posted by Michael Humphrey | Jun 21, 2007 9:47 AM ET
- privacy
It reminds me of the comment from Scott McNealy about there being no such thing as privacy anymore, so just get used to it.
Posted by Roland Cycan | May 24, 2007 9:01 AM ET
- Naked under the Law
Perhaps a fish with an exposed fin might feel naked in a goldfish bowl, after cheating heavily on all sides, but one can hardly feel sorry for it. If the last regulator to see the result of noncompliance with regulation meant to protect business capital, the economy, the people and the heritage of our country is the IRS, then I really feel sorry for the next big byte.
Posted by Jean Marshall | May 23, 2007 9:21 AM ET
