A tax position is taxpayer’s decision regarding how to treat a line item on their tax return. The position taken may be a specific interpretation of the tax laws or regulations as they pertain to a variety of tax-related items, such as an asset classification, the recognition of income, or when to record a transaction. A tax position can yield a permanent reduction or deferral of income taxes payable.

Examples of Tax Positions

Examples of tax positions are the decision to not file a tax return, to shift income between tax jurisdictions, and to classify a transaction as tax-exempt.