In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for Uncertain Tax Positions (known as FIN 48).

Effective for years beginning after December 15, 2006, preparers of financial statements must recognize and measure all uncertain tax positions taken by the company. This includes estimating and disclosing the amount of the company’s potential tax assessments. Disclosure of the potential impact of such position is required, unless the company believes that their position would “more likely than not” be upheld under audit or in court. One of the issues is a potential tax assessment due to payment of unreasonable compensation.