FIN 48
Excerpt from Interpretation 48
9. When a tax-planning strategy is contemplated as a source of future
taxable income to support the realizability of a deferred tax asset
under paragraph 21(d) of Statement 109, paragraphs 5-8 of this
Interpretation shall be applied in determining the amount of available
future taxable income.
As previously mentioned, FAS 109, par. 21(d), states that a tax-planning strategy
may be a possible source of taxable income for the realization of DTAs. FIN 48, par.
9, makes clear that the unit of account, recognition, and measurement principles of
FIN 48 should be applied when determining whether a tax-planning strategy provides
a source of future taxable income for the realization of DTAs. In effect, a proposed
tax-planning strategy would need to meet the FIN 48 more-likely-than-not
recognition threshold from a tax law perspective before the company considered
whether it was also prudent and feasible, as described in FAS 109. Assuming
recognition is met (and the tax-planning strategy was determined to be prudent,
feasible, and primarily within the company’s control), the amount of taxable income
that would be provided by the tax-planning strategy should be measured as the
largest amount of benefit that is more likely than not to be realized.