Also known as: ASC 450 · FASB ASC Topic 450 · ASC 450-20 · contingencies · loss contingencies
Written by attorneys · grounded in primary & secondary sources — see below
A financial accounting standard that requires a tax return benefit to be probable of being sustained before it is recognized in financial statements.
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Frontier Capital entered a supply contract that later became impracticable due to a supervening event. Its accountants evaluated whether a related tax benefit could be recognized. They concluded recognition was barred because the benefit was not probable of being sustained.
Fisher Foods reviewed a deed conveying land to a named grantee followed by contingent remainders that exhausted all possibilities at the grantee's death. Accountants assessed a potential tax position arising from the conveyance and declined to recognize the benefit because it failed the probable-sustained test.
The standard requires that recognition occur only when the benefit is probable of being sustained on examination.
Supporting sources