Carnival Cruises 2007 Annual Report Download - page 31

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
28 | CARNIVAL CORPORATION & PLC
NOTE 16— RECENT ACCOUNTING
PRONOUNCEMENT
In June 2006, FIN 48 was issued which clarifies, among
other things, the accounting for uncertain income tax posi-
tions by prescribing a minimum probability threshold that a
tax position must meet before a financial statement income
tax benefit is recognized. The minimum threshold is defined
as a tax position that, based solely on its technical merits, is
more likely than not to be sustained upon examination by the
relevant taxing authority. The tax benefit to be recognized is
measured as the largest amount of benefit that is greater than
fifty percent likely of being realized upon ultimate resolution.
FIN 48 must be applied to all existing income tax positions
upon adoption. The cumulative effect of applying FIN 48 at
adoption is required to be reported separately as an adjust-
ment to the opening balance of retained earnings in the year
of adoption. We are required to implement FIN 48 as of the
beginning of fiscal 2008.
The adoption of FIN 48 will not have a material impact on
our opening December 1, 2007 retained earnings. Based on
all known facts and circumstances and current tax law, we
believe that the total amount of our uncertain income tax posi-
tion liabilities and related accrued interest are not material to
our November 30, 2007 financial position. However, income
tax laws and regulations under which our uncertain income
tax position liabilities are determined could change or could be
interpreted differently. For example, changes to how Section
883 of the Internal Revenue Code and related regulations are
interpreted could result in additional uncertain income tax
position liabilities having to be recognized. The Internal Revenue
Service is currently auditing our U.S. domestic operations’
income tax returns for fiscal 2004 and 2005. Finally, our pri-
mary income tax jurisdictions are the U.S., Italy and the UK for
which our income tax returns remain subject to examination
from the years ended November 30, 2004, 2003 and 2002,
respectively.