This video shows how to account for Uncertain Tax Positions. U.S. GAAP requires the use of a 2-step test to determine the amount of any tax benefit that may be recognized. In step 1, you determine whether it is more likely than not that your tax position will be upheld. If the likelihood of it being upheld is greater than 50%, you move to Step 2. Step 2 allows you to recognize the largest benefit with a cumulative probability of greater than 50%. The video shows how to do this with an example, and it also shows how to record the necessary tax contingency reserve liability accounting with a journal entry.