P $16-13$ Multiple differences; uncertain tax position $016-2,$ L$016-5,$ LO$16-9$

Tru Developers, Inc., sells plots of land for industrial development. Tru recognizes income for financial reporting purposes in the year it sells the plots. For some of the plots sold this year, Tru took the position that it could recognize the income for tax purposes when the installments are collected. Income that Tru recognized for financial reporting purposes in $2024$ for plots in this category was $$60$ million. The company expected to collect $60\%$ of each sale in $2025$ and $40\%$ in $2026.$ This amount over the next two years is as follows:

Tru's pretax accounting income for $2024$ was $$88$ million. In its income statement, Tru reported interest income of $$16$ million, unrelated to the land sales, for which the company's position is that the interest is not taxable. Accordingly, the interest was not reported on the tax return. There are no differences between accounting income and taxable income other than those described above. The enacted tax rate is $25\%.$

Management believes the tax position taken on the land sales has a

Page $966$

greater than $50\%$ chance of being upheld based on its technical merits, but the position taken on the interest has a less than $50\%$ chance of being upheld. It is further believed that the following likelihood percentages apply to the tax

treatment of the land sales $($ $ in millions$)$:

Amount Qualifying for

Percentage Likelihood of

Installment Sales Treatment

Tax Treatment Being Sustained

$\backslash$table$[[$$$60,20\%$