This actual change of the accounting system deals with the Internal Revenue code section 475. It’s moving from a cash basis capital gain or losses to a “mark to raked” which is ordinary gains and ordinary losses better known as fair value of the market price. Sing this method UPS recognizes Its pension gain and losses on an annual basis Instead of recognizing the Impact over the years. This change of accounting method has not change In their pension’s participant’s benefits plans, The benefit Is that ordinary losses may be deducted In full against any type of tax return. UPS for Instance, revised their past financial statements and recognized as If hey occurred In the prior year and declared Its losses which add up to the corporate Income.
They Incurred In pretax losses of $4. 831 billion, $827 million and SSL 12 million can be able to carry back three years for tax immediately refund and then carry forward up to 20 years. The benefits of the “Mark to Market” method is not reflected when the company gains because regardless of the method that an entity use taxes must be paid in all income “gains” received the benefit thought is when the company has losses like in this case.