YUM · 10-Q · 2026Q3 · Full report

IRS Tax Dispute

YUM BRANDS INC · 2026-11-06 · Importance 56 · Surprise 24 · No source text

Following an IRS audit of fiscal years 2013 to 2015, the IRS asserts approximately $2.1 billion of underpaid tax and $418 million in penalties for fiscal year 2014, plus approximately $2.4 billion of interest accrued through September 30, 2026. The dispute primarily concerns 2014 reorganizations that the IRS says resulted in taxable distributions of approximately $6.0 billion. YUM filed a petition in the U.S. Tax Court on June 4, 2025, and the litigation remains ongoing; the Company says it expects no resolution within twelve months and has recorded no reserve.

Key facts

• The IRS asserted approximately $2.1 billion of tax underpayment plus $418 million of penalties for YUM's 2014 fiscal year, with approximately $2.4 billion of interest accrued through September 30, 2026. source
• The IRS dispute relates primarily to 2014 reorganizations and the IRS asserts that the transactions resulted in taxable distributions of approximately $6.0 billion. source
• YUM does not expect resolution of the IRS dispute within twelve months and has recorded no reserve because it believes its tax position is more likely than not to be sustained. source
• YUM filed a petition in the United States Tax Court disputing the IRS position on June 4, 2025; the IRS filed its Answer on September 12, 2025, and the litigation is ongoing. source
• YUM stated that an unfavorable resolution of the IRS dispute could materially and adversely affect its financial statements in future periods. source

Impact estimates