Threshold for Filing Schedule UTP Drops to $10 Million in Assets

Jan. 9, 2014

Beginning with the 2014 tax year, corporate taxpayers with at least $10 million in assets that record a reserve for uncertain tax positions (UTP) in audited financial statements are required to report those positions to the IRS on Form 1120, “Schedule UTP.” Before 2014 this requirement applied only to corporations with at least $50 million in assets. Partnerships and S corporations currently are not required to file Schedule UTP.

Taxpayers completing Schedule UTP for the first time in 2014 should take note of the following items:

  • Schedule UTP is required only if a corporation records a reserve for a position in its audited financial statements.
  • A corporation is not required to report any tax position against which a reserve was recorded before the corporation was required to file Schedule UTP.
  • If a taxpayer intends to litigate a position, the taxpayer still must report the position on Schedule UTP.
  • If a deduction claimed in 2012, for example, is challenged by the IRS in 2014 and the company records a reserve in 2014, that position must be reported on Schedule UTP in 2014 even though the IRS is aware of the UTP.
  • If a company has recorded a reserve against a tax position in a year when there is a net operating loss or credit carryforward, that position must be reported in the year of the loss or credit but does not need to be reported again in any year to which the loss or credit is carried.

Additional guidance on Schedule UTP is available from the IRS website.

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David Holets
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Howard Wagner
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