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ment attribute for the \ufb01nancial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classi\ufb01cation, interest and penalties, accounting in interim periods, disclo- sure, and transition.
The evaluation of a tax position in accordance with this Interpretation is a two-step process. The \ufb01rst step is recognition: The enterprise determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the enterprise should presume that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. The second step is measurement: A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of bene\ufb01t to recognize in the \ufb01nancial statements. The tax position is measured at the largest amount of bene\ufb01t that is greater than 50 percent likely of being realized upon ultimate settlement.
b. A reduction in a deferred tax asset or an increase in a deferred tax liability
c. Both (a) and (b).
An enterprise that presents a classi\ufb01ed statement of \ufb01nancial position should classify a liability for unrecognized tax bene\ufb01ts as current to the extent that the enterprise anticipates making a payment within one year or the operating cycle, if longer. An income tax liability should not be classi\ufb01ed as a deferred tax liability unless it results from a taxable temporary difference (that is, a difference between the tax basis of an asset or a liability as calculated using this Interpretation and its reported amount in the statement of \ufb01nancial position). This Interpretation does not change the classi\ufb01cation requirements for deferred taxes.
Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the \ufb01rst subsequent \ufb01nancial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the \ufb01rst subsequent \ufb01nancial reporting period in which that threshold is no longer met. Use of a valuation
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