The IRS has released a report analyzing the uncertain tax positions taken by corporations during the 2011 tax year. The requirements for a corporation to be included in the analysis were the analyzed corporation had to have:
• Issued or be included in audited financial statements ;
• Assets equal to or greater than $50 million;
• Taken a tax position on its U.S. federal income tax return for 2011 or a prior tax year; and
• Recorded a reserve in its audited financial statements with respect to that tax position or did not record a reserve because the corporation expects to litigate the position.
Corporate statistics reported for tax year 2011 include:
• In 2010, 2,356 taxpayers filed an uncertain tax position on Schedule UTP. In 2011, 1,783 taxpayers filed Schedule UTP.
• In 2010, 49% of all returns with a Schedule UTP contained only one uncertain tax position. By contrast in 2011, this number fell to 47%.
• In 2010, Coordinated Industry Case* (CIC) taxpayers averaged 3.1 uncertain tax positions per Schedule UTP, but in 2011 the number rose to 3.8. In contrast, Industry Case* (IC) taxpayers averaged 1.9 uncertain tax positions in 2010, but increased to 2.0 in 2011.
While an analysis of the specific uncertain tax positions had not been made for 2011, in 2010 43% of the uncertain tax positions covered transfer pricing and research credit. Further the top four code sections referenced were IRC 41, 482, 263, and 162.
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*A Coordinated Industry Case (CIC) is defined as a taxpayer and its’ effectively controlled entities that warrants application of team examination procedures and meets the point criteria outlined in the Internal Revenue Manual. An Industry Case (IC) is defined as a taxpayer and its’ effectively controlled entities that warrants application of team examination procedures and does not meet the definition of a Coordinated Industry case. IRM 22.214.171.124 – 126.96.36.199.2.