Essay

You are the tax director for Gunner Corporation.You and your team have estimated that Gunner Corporation can take an IRC Section 199 deduction of $300,000 in 2017.In calculating the amount of the deduction, you and your team have been aggressive in the interpretation of the costs that can be included in the deduction calculation.The aggressive items amount to $140,000 of the $300,000 deduction noted above.The tax benefit related to the aggressive portion of the deduction is $49,000.

The CFO of Gunner wants to know if he can record tax benefit for the entire $49,000 in the financial statements.What is the process that you would go through to determine if Gunner can book the benefit?