Tighter accounting standards for risky tax deals.(ENFORCEMENT)

Kiplinger Tax Letter, The, January, 2007

Tighter accounting standards for risky tax deals won't be delayed for a year, as many businesses wanted. They sought the extra time to get their accounting systems ready for new rules instituted by FASB, the Financial Accounting Standards Board. Starting this year, companies can include tax shelter benefits in financial statements only if they show there's a better-than-50% chance that the deal will pass muster with IRS.

But IRS won't add insult to injury: Companies won't be required during audits to hand over the analyses they prepared showing they comply with the new accounting standard. The IRS will only seek those documents in rare cases, such as when a firm didn't disclose an abusive shelter.