FASB Provides Guidance on Certain Tax Reform Implications

Chris Gaetano
Published Date:
Jan 11, 2018

The Financial Accounting Standards Board (FASB), during its Wednesday meeting, provided guidance on questions of how certain aspects of the new tax law will affect financial reporting, according to the Journal of Accountancy. The guidance will be posted as a staff Q&A on the FASB website, but in short: 

* Private companies and not-for-profit entities may apply SEC Staff Accounting Bulletin No. 118, FASB said, even though the views and interpretations of the SEC staff are not directly applicable to private companies and not-for-profits.

* Tax liability on repatriation should not be discounted in company financial reports.

* AMT credits that will be used or ultimately refunded should not be discounted in company financial reports.

*  Deferred tax assets (DTAs) and liabilities should be measured for financial reporting purposes at the regular tax rate rather than the lower BEAT rate.

* DTAs and liabilities due to the new GILTI provisions can be recognized for basis differences expected to reverse as a result of the GILTI provisions in future years or included in the period in which it occurred. 

The FASB also voted to propose a one-time reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from the new corporate tax rate, according to the Journal. If the proposal is approved, the amount of the reclassification would be the difference between the 35 percent historical corporate tax rate and the newly enacted 21 percent rate.

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