The pressure is constantly on to keep your effective tax rate as low as possible. At the same time, you must ensure that management, your board and analysts have the most accurate information; new federal regulations make this mandatory.

Other questions, too, may be keeping you awake at night:

• How does your effective tax rate compare with that of your competitors?
• How accurate will your effective tax rate projections be for next quarter and for longer-range business planning?
• Are your deferred tax assets realizable?
• Are your tax reserves adequate in the near-term and ongoing?

The answers to these questions are complex and challenging because they involve subjectivity as well as quantitative analyses. It is critical that you have reliable tax data, keen insight and a solid methodology in place for each of these areas.

In addition, there are other issues that have an impact on FAS 109 calculations:

• Legislative changes – Understanding the accounting impacts of legislative changes on your taxable income and, ultimately, your income statement and balance sheet.
• International operations – The task of gathering the information from domestic and overseas operations is one thing; you also have to deal with the tax effects and accounting treatment of complex international transactions.
• Mergers & acquisitions – As M&A activities heat up again, it is critical to understand the tax effects of business combinations, which can have a material impact on your current balance sheet and on your future income statement.
• Corporate reorganizations – If your company or any subsidiaries are involved in or emerging from bankruptcy, what are the specific disclosures that must be made relating to tax? How are the tax effects of bankruptcy-related basis adjustments recorded in your financial statements?
• Internal controls – Are your internal controls around your tax accounting function sufficient to meet Sarbanes-Oxley section 404 requirements?
• Technology – Does your tax department have access to the most timely and correct information, at the appropriate level of granularity, to make reliable compliance and projection calculations?

Address all of these issues correctly, and you have a better chance of accurately anticipating changes in earnings as a result of changes in tax expense. This is important if you want to keep management and investors happy.

Discover how the FAS 109 professionals of Deloitte Tax LLP can help you with all of the above and more.