IFUL » Topics » Income Taxes

This excerpt taken from the IFUL 10-Q filed Aug 14, 2008.

Income Taxes

We follow the asset and liability method of accounting for income taxes as set forth by SFAS No. 109, Accounting for Income Taxes, or SFAS 109, and the provisions of Financial Accounting Standards Board, or FASB, Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109, or FIN 48 . FIN 48 clarifies the accounting and disclosure for uncertainty in income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting for interim periods, disclosure and transition, and clearly excludes income taxes from the scope of FASB Statement No. 5, Accounting for Contingencies.

Under SFAS 109 and FIN 48, certain assumptions are made that represent significant estimates. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis, net of operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. FIN 48 requires a company to recognize the impact of a tax position in its financial statements if that position is more likely than not to be sustained upon audit, based on the technical merits of the position. The provisions of FIN 48 are effective for fiscal years beginning after December 31, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The adoption of FIN 48 did not have a material effect on our results of operations or financial condition.

We have adopted a policy of classifying interest and penalties associated with income tax matters as general and administrative expense (rather than to income tax expense) when incurred.

We have incurred net operating losses. We continue to maintain a valuation allowance for the full amount of the net deferred tax asset balance associated with our net operating losses because sufficient uncertainty exists regarding our ability to realize such tax assets in the future. There were no unrecognized tax benefits as June 30, 2008 or December 31, 2007.

Our tax returns for U.S. tax years 2004, 2005, 2006 and 2007 are subject to potential examination by the Internal Revenue Service. In addition, our tax returns for U.S. tax years 1993 to 2000 and tax year 2002 may be subject to examination by the Internal Revenue Service to the extent that we utilize the net operating loss carryforward from those years in our current or future year tax returns. In the United Kingdom and France, our tax returns for tax years 2006 and 2007 are subject to potential examination, while in Switzerland our returns for tax years from 1998 through 2007 are subject to potential examination. We are not currently under income tax examination by any tax jurisdiction.

This excerpt taken from the IFUL 10-Q filed May 15, 2008.

Income Taxes

We follow the asset and liability method of accounting for income taxes as set forth by SFAS No. 109, Accounting for Income Taxes, or SFAS 109, and the provisions of Financial Accounting Standards Board, or FASB, Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109, or FIN 48 . FIN 48 clarifies the accounting and disclosure for uncertainty in income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting for interim periods, disclosure and transition, and clearly excludes income taxes from the scope of FASB Statement No. 5, Accounting for Contingencies.

Under SFAS 109 and FIN 48, certain assumptions are made that represent significant estimates. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis, net of operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. FIN 48 requires a company to recognize the impact of a tax position in its financial statements if that position is more likely than not to be sustained upon audit, based on the technical merits of the position. The provisions of FIN 48 are effective for fiscal years beginning after December 31, 2006, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The adoption of FIN 48 did not have a material effect on our results of operations or financial condition.

We have adopted a policy of classifying interest and penalties associated with income tax matters as general and administrative expense (rather than to income tax expense) when incurred.

We have incurred net operating losses. We continue to maintain a valuation allowance for the full amount of the net deferred tax asset balance associated with our net operating losses because sufficient uncertainty exists regarding our ability to realize such tax assets in the future. There were no unrecognized tax benefits as March 31, 2008 or December 31, 2007.

Our tax returns for U.S. tax years 2004, 2005, 2006 and 2007 are subject to potential examination by the Internal Revenue Service. In addition, our tax returns for U.S. tax years 1993 to 2000 and tax year 2002 may be subject to examination by the Internal Revenue Service to the extent that we utilize the net operating loss carryforward from those years in our current or future year tax returns. In the United Kingdom and France, our tax returns for tax years 2006 and 2007 are subject to potential examination, while in Switzerland our returns for tax years from 1998 through 2007 are subject to potential examination. We are not currently under income tax examination by any tax jurisdiction.

EXCERPTS ON THIS PAGE:

10-Q
Aug 14, 2008
10-Q
May 15, 2008
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