The application of ACS 740 to an uncertain tax position allows tax benefits to be recognized in financial statements only when it is determined that it is more likely than not that the tax position can be sustained or when the position is ultimately settled via an audit, a negotiation, or a court decision.

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This statement is correct. ACS 740 sets guidelines for recognizing and measuring uncertain tax positions in financial statements, and it requires that tax benefits are recognized only when it is more likely than not that they will be sustained upon examination by tax authorities or when the position is ultimately settled.

The Application of ACS 740 to an Uncertain Tax Position