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AMBAC'S IRS Auseinandersetzung verlangsamt den Ausstieg aus der Insolvenz (CH11)March 16, 2012, 4:36 PM ETBy Emily Chasan Ambac’s IRS Tussle Slows Bankruptcy Exit Bond insurer Ambac won court approval of its bankruptcy exit plan this week, but won’t finish the process until it settles a long-running dispute with the Internal Revenue Service over how it accounted for credit default swaps. The dispute stemmed from a change in Ambac’s accounting methods for CDS, and is a reminder that companies need to check with the IRS when switching to accounting methods even if the new treatment is considered to be more proper, according to Robert Willens, an independent tax and accounting expert at Robert Willens LLC in New York. “The problem here is that Ambac never obtained permission,” Willens told CFO Journal. In the fall of 2010, Ambac was expecting to file for bankruptcy but hurried into court protection ahead of schedule in an attempt to secure its assets after the IRS questioned its accounting for tax refunds related to CDS and its $7.3 billion of net operating losses. The tax refunds were about a third of Ambac’s liquid assets and the company was worried the IRS would seize them. The IRS has demanded that Ambac return $807 million in tax benefits, and Ambac is offering to settle the claims for $102 million and give up $3.7 billion in related net operating losses. The IRS has not yet accepted the plan. Prior to 2007, Ambac had recognized gains on its CDS contracts as capital gains. But when the housing market turned amid the financial crisis, Ambac switched its accounting method to recognize CDS losses as operating losses – making it eligible for a refund and to record net operating losses from the huge hits it was taking. As Daily Bankruptcy Review reports here: Ambac has maintained that its accounting was proper when it collected more than $700 million in tax refunds related to credit default swap contracts between December 2008 and January 2010. The disagreement stems from Ambac’s decision in 2007 to switch to what is called the “impairment” method when accounting for losses on CDS contracts, rather than the “wait-and-see” method it used before. Ambac has called the switch a “reasonable” accounting decision. Whether the switch was technically proper from an accounting perspective, Ambac still needed to get formal approval from the IRS, Willens said. Ambac made the change without explicit approval from the IRS, but contends that the IRS ignored its requests that the agency review the change. An Ambac spokesman was not immediately available. “Even if you’re using an ‘improper’ or less preferable method of accounting for an item, the case here, you’re still required to secure permission to change to the proper or more preferable method,” Willens added. http://mobile.blogs.wsj.com/cfo/2012/03/16/ambacs-irs-tussle… |
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| aus der Diskussion: | AMBAC der Phönix aus der Asche? |
| Autor (Datum des Eintrages): | CoolerAktionaer (17.03.12 21:34:27) |
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