The SEC gives Apple’s tax loopholes a passing grade

FORTUNE — In June, three weeks after the media had their fun (ahem, Jon Stewart) with Tim Cook’s appearance before the Senate Permanent Subcommittee on Investigations, Apple (AAPL) received a fax from the Securities Exchange Commission.

The SEC’s staff had taken a close look at Apple’s Form 10-K for fiscal 2012 and it had several questions. One of them mentioned Cook’s testimony:

Your financial statements indicate that you provide for any related tax liability on undistributed foreign earnings that “may be repatriated.” Please explain to us how the phrase “may be repatriated” should be interpreted in this context. We note that Tim Cook [testified] that you have no plans to repatriate these earnings at the current tax rate. In addition, explain to us how you evaluated the criteria for the exception to recognition of a deferred tax liability in accordance with ASC 740-30-25-17 and 18 for undistributed earnings that are intended to be indefinitely reinvested.

It was a question only a tax accountant could love. But over the summer, Apple answered it and six additional, equally complex queries. The SEC was letting Apple know that everything it did to minimize its tax burden was going to be scrutinized extra carefully by the agency’s sharp-eyed tax experts.

But in the end, the only thing Apple had to change was the language of its SEC filings. Basically, the agency wanted enough information in the 10-K so that a shareholder who studied it might understand how the company’s tax strategies worked and what risks they entailed.

Apple agreed, and on Sept. 5 the SEC alerted the company that its review was complete.

That, apparently, is agency-speak for “the investigation is closed, pending further revelations.”

Links to the letters:

There are stories about the exchange of letters in the
Wall Street Journal
and the LA Times.