Uncertain Tax Positions - What to do for California
For taxable years beginning on or after January 1, 2010, the Internal Revenue Service requires a corporation to file the Schedule Uncertain Tax Positions (UTP) with its income tax return if the corporation:
- Files Form 1120, U.S. Corporation Income Tax Return; Form 1120-F, U.S. Income Tax Return of a Foreign Corporation; Form 1120-L, U.S. Life Insurance Company Income Tax Return; or Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return.
- Has assets that exceed $100 million.
- Issued audited financial statements reporting all or a portion of the corporation's operations for all or a portion of the corporation's tax year.
- Has one or more tax positions that must be reported on Schedule UTP.
California will include information about this new federal requirement in the instruction booklet for the Form 100/100W. If your client is filing the federal Schedule UTP (Form 1120), then they should attach it to the California Franchise or Income Tax Return. In addition, the corporation must complete Question AA on Form 100/100W. At this time, no decision has been made on whether the state should set up its own similar disclosure program.