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Update: IRS Finalizes Schedule UTP which Affects Foreign Businesses

Posted on October 14th, 2010 | Author: Norris McLaughlin & Marcus

In April, we published “What Offshore Businesses & Tax Practitioners Need to Know About IRS Draft Schedule UTP,” a post on the Proposed Schedule UTP (Uncertain Tax Positions), which is a schedule certain foreign businesses would be required to file with their Form 1120 to disclose uncertain tax positions when the business assets are at least $10 million and the business issues or is included in audited financial statements. On September 24, 2010, the IRS finalized this schedule and also released Announcement 2010-75 explaining the form. The final schedule and instructions make some changes to the draft from April.  Here is an overview of the major changes:

  1. There is a five year phase-in of the reporting requirement for the UTP if the Corporation’s assets are under $100 million.
  2. There is no reporting of a maximum tax adjustment (the draft required this).
  3. There is no reporting of the rationale and nature of uncertainty in the concise description of the position (also required in draft form).
  4. There is no reporting of administrative practice tax positions.

Please consult an attorney for assistance in preparing this new form.