Case 15-9 Settled or Not Settled

Fact Pattern 1

3D Printing Inc. (3D Printing), a calendar-year-end company, has multiple uncertain tax positions (UTPs) related to its 2010 federal tax return. Some UTPs met the more-likely- than-not recognition threshold on the basis of 3D Printings initial assessment while others did not. During 2012, the IRS audited the 2010 tax return. During Q3 2012, the examining agents verbally indicated the preliminary conclusion on certain UTPs, and the IRS and 3D Printing formalized their agreement on these UTPs by signing IRS Form 906, Closing Agreement on Final Determination Covering Specific Matters, in Q4 2012. Subsequently, in Q1 2013, the IRS completed its examination of the 2010 tax return whereby the IRS and 3D Printing agreed to the final closing agreement. 3D Printing does not intend to appeal or litigate any aspects of the examined UTPs, and it is remote that the IRS would examine or reexamine any aspects of the 2010 federal tax return. Refer to the table below for further facts on each of the UTPs.

	Met Recognition Threshold?	Amount of Tax Benefit Recognized in the Financial Statements	Specifically Examined?	Verbally Communicated in Q3?	Listed on Q4 Form 906?	Benefit Sustained
UTP 1	No	0%	Yes	Yes	Yes	80%
UTP 2	No	0%	No	No	No	100%
UTP 3	No	0%	Yes	No	Yes	0%
UTP 4	Yes	65%	Yes	Yes	Yes	50%
UTP 5	Yes	70%	No	No	No	100%
UTP 6	Yes	60%	Yes	No	Yes	0%

Required:

1. For each tax position taken on its 2010 federal tax return:

a. When can 3D Printing assert an effective settlement?

b. When should 3D Printing adjust previously recognized amounts in the financial statements, if any?

2. Does 3D Printing have a basis to change its assessment of similar tax positions taken in other periods if it concludes it meets the effective settlement conditions related to the UTPs included in its 2010 tax return?

3. If 3D Printing were to report under IFRSs, what are the main differences in accounting for uncertainty in income taxes it would encounter?