A Roadmap to Accounting for Income Taxes - Deloitte
A Roadmap to Accounting for Income Taxes
2017
Other Publications in Deloitte's Roadmap Series
Roadmaps are available on these topics: Asset Acquisitions (2017) Common-Control Transactions (2016) Consolidation -- Identifying a Controlling Financial Interest (2017) Contracts on an Entity's Own Equity (2017) Discontinued Operations (2017) Distinguishing Liabilities From Equity (2017) Foreign Currency Transactions and Translations (2017) Non-GAAP Financial Measures (2017) Noncontrolling Interests (2017) The Preparation of the Statement of Cash Flows (2017) Pushdown Accounting (2016) Revenue Recognition (2017) Segment Reporting (2017) Share-Based Payment Awards (2017)
Roadmaps on these topics will be available soon: Leases
The FASB Accounting Standards Codification? material is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. As used in this document, "Deloitte" means Deloitte & Touche LLP, a subsidiary of Deloitte LLP. Please see us/about for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright ? 2017 Deloitte Development LLC. All rights reserved.
Contents
Prefacexvi
Acknowledgmentsxvii
Contactsxvi
Executive Summary
xviii
Chapter 1 -- Overview
1
1.01 Overview of ASC 740
3
1.02 Objectives of ASC 740
4
Chapter 2 -- Scope
6
2.01 Taxes Within the Scope of ASC 740
7
2.02 Hybrid Taxes
8
2.03 Accounting for Taxes Assessed on the Payor of a Dividend
9
2.03A Accounting for Taxes Withheld on Certain Payments (e.g., Dividend, Interest,
Royalty, or License)*
10
2.04 Refundable Tax Credits
11
2.05 Income Tax Indemnifications Upon Sale of a Subsidiary That Previously Filed a
Separate Tax Return
12
Chapter 3 -- Recognition and Derecognition
14
General Recognition Approach
14
3.01 Exceptions to Recognition of Deferred Taxes
17
3.02 Definition of Subsidiary and Corporate Joint Venture*
18
3.03 Definition of Foreign and Domestic Investments
18
3.04 Definition of "Inside" and "Outside" Basis Differences
20
3.05 Recognition of Deferred Taxes for Inside Basis Differences
21
3.06 Deferred Tax Considerations Related to Withholding Taxes Imposed on Distributions From
Disregarded Entities and Foreign Subsidiaries
21
3.07 Recognition of Deferred Taxes for Temporary Differences Related to the CTA
23
3.08 Hedge of a Net Investment in a Foreign Subsidiary
24
3.09 Deferred Taxes Recorded Through the Currency Translation Adjustment
24
3.10 Whether a Change in Management's Plans for Reinvestment or Repatriation of Foreign
Earnings Is a Recognized or Nonrecognized Subsequent Event
25
* Items that are new or have been significantly amended since the previous edition.
iii
Contents
3.11 Tax Consequences of a Change in Intent Regarding Remittance of Pre-1993
Undistributed Earnings
26
3.12 Tax Consequences of Bad-Debt Reserves of Thrift Institutions
26
3.13 Tax Consequences of a Reduction of the Tax Base-Year Bad-Debt Reserve in an Annual Period 29
3.14 Tax Consequences of a Reduction of the Tax Base-Year Bad-Debt Reserve in an Interim Period 30
3.15 Realization of a DTA of a Savings and Loan Association: Reversal of a Thrift's Base-Year Tax
Bad-Debt Reserve
30
3.15A Regulated Entities Subject to ASC 980*
31
3.15B Construction in Progress and Plant in Service Recorded Net-of-Tax*
31
3.16 Intra-Entity Transactions Between Different Tax-Paying Components
31
3.17 Subsequent Changes in Tax Rates Involving Intra-Entity Transactions
32
3.18 Indexing of the Tax Basis of Assets and Liabilities
33
Tax Positions
34
3.19 Consideration of Tax Positions Under ASC 740
36
3.20 Considerations of Tax Positions by Tax-Exempt or Pass-Through Entities
37
3.20A Unrecognized Tax Benefits and Spin-Off Transactions
37
3.21 Accounting for the Tax Effects of Tax Positions Expected to Be Taken in an Amended
Tax Return or Refund Claim or to Be Self-Reported Upon Examination
39
3.22 Recognition and Measurement -- Assumptions to Be Used
40
3.23 Decision Tree for Recognizing Benefits of a Tax Position
41
3.24 Legal Tax Opinions Not Required to Support a Tax Position
42
3.25 Meaning of the Court of Last Resort and Its Impact on Recognition
42
3.26 Impact of the Likelihood of the U.S. Supreme Court's Hearing the Case
43
3.27 Consideration of Widely Understood Administrative Practices and Precedents
43
3.28 Applying ASC 740 to Questions About Economic Nexus
44
3.29 Lookback Period for Accruing a State Income Tax Liability for UTBs
44
3.30 Determining the Unit of Account
45
3.31 Whether Determination of the Unit of Account Is an Accounting Policy Choice
46
3.32 Applying the Unit of Account
46
3.33 Decision Tree for the Subsequent Recognition, Derecognition, and Measurement of
Benefits of a Tax Position
47
3.34 Evaluating the Recognition Threshold After Examination of a Tax Year
48
3.35 Effectively Settled Tax Positions
48
3.36 Finality or Certainty of Outcome in Subsequent Recognition, Derecognition, or
Measurement of a Tax Position
49
3.37 New Information Obtained After the Balance Sheet Date Concerning Uncertain Tax Positions 50
3.38 Interim Accounting for a Change in Judgment
51
3.39 Changes in Judgment Regarding a Tax Position Taken in the Current Year
51
3.40 Changes in Judgment Regarding a Tax Position Taken in the Prior Year
52
3.41 Distinguishing a Change in Estimate From a Correction of an Error
53
3.42 Deferred Tax Consequences of UTBs
55
Temporary Differences
56
3.43 Tax Bases Used in the Computation of Temporary Differences
60
3.44 Temporary Differences
60
iv
Contents
3.45 Income Tax Consequences of Issuing Debt With a Conversion Feature Accounted
for Separately as a Derivative
61
3.46 Income Tax Effects on Medicare Part D Subsidy Receipts
64
3.47 Recognizing Deferred Taxes for Indefinite-Lived Assets
64
3.48 Deferred Tax Considerations When Goodwill Becomes a Finite-Lived Asset
65
3.49 Deferred Tax Consequences of Synthetic Leases
65
3.50 Considering the Impact of Tax Method Changes
66
3.51 When to Recognize the Impact of Tax Method Changes
69
3.51A Accounting for Foreign Branch Operations
70
3.51B Deferred Income Taxes Related to a Foreign Branch: Accounting for Changes in
a Parent's Deferred Taxes Due to Changes in Exchange Rates
74
Basis Differences That Are Not Temporary Differences
76
3.52 Permanent Differences
77
3.53 Examples of Basis Differences That Are Not Temporary Differences
78
Change in Tax Status
80
3.54 Change in Tax Status of an Entity
80
3.54A Tax Effects of a "Check-the-Box" Election
82
3.55 Recognition Date for Conversion to a REIT
83
3.56 Loss of Nontaxable Status as a Result of Acquisition
84
3.57 Successor Entity's Accounting for the Recognition of Income Taxes When the
Predecessor Entity Is Nontaxable
85
3.58 Accounting for the Elimination of Income Taxes Allocated to a Predecessor Entity
When the Successor Entity Is Nontaxable
87
3.59 Voluntary Change in Tax Status of an Acquired Entity
88
3.60 Change in Tax Status as a Result of a Common-Control Merger
88
3.61 Change in Tax Status to Taxable: Accounting for an Increase in Tax Basis
88
3.62 Built-in Gain: Recognition and Measurement
89
Tax Holidays
91
3.63 Tax Consequences of Tax Holidays
91
3.63A Accounting for Temporary Differences Related to Investment Tax Credits*
92
Effect of Anticipated Future Special Deductions, Losses, and Tax Credits
96
Alternative Minimum Tax
97
Investment Tax Credits
98
Changes in Laws or Rates
98
3.64 Retroactive Changes in Tax Laws or Rates and Expiring Provisions That May Be Reenacted
98
3.65 Enacted Changes in Tax Laws or Rates That Affect Items Recognized in OCI
98
3.66 Reporting Tax Effects of a Change in Tax Law in Discontinued Operations
100
Acquired Temporary Differences in Certain Purchase Transactions That Are Not Accounted for
as Business Combinations
101
Interest and Penalties
102
3.67 Recognition and Measurement of Interest and Penalties
103
3.68 Interest Income on UTBs
104
3.69 Capitalization of Interest Expense
105
3.70 Recognition of the Accrual for Penalties
105
v
Contents
Chapter 4 -- Measurement
General Measurement Approach 4.01 Measuring Deferred Taxes in Consolidated Financial Statements When a Foreign Subsidiary Uses a Local Statutory Basis of Accounting to Prepare Its Financial Statements
Applicable Tax Rate Used to Measure Deferred Taxes 4.02 Tax Rate Used in Measuring Operating Losses and Tax Credits 4.03 Determining the Applicable Tax Rate on a Loss Carryback 4.04 Measuring Deferred Taxes for Indefinite-Lived Intangible Assets When Different Tax Rates May Apply 4.05 Use of a Blended Rate to Measure Deferred Taxes 4.06 Effect of Tax Holidays on the Applicable Tax Rate 4.07 Consideration of Certain State Matters, Including Optional Future Tax Elections, in the Measurement of DTAs and DTLs 4.08 Situations in Which Determining the Applicable Tax Rate May Be Complex 4.09 Graduated Tax Rates 4.10 Measurement When Graduated Tax Rates Are a Significant Factor 4.11 Measurement When Future Tax Losses Are Expected in a Graduated Tax Rate Structure 4.12 Measurement When Phased-In Changes in Tax Rates Are Enacted 4.13 Measurement When Contingent Phased-In Changes in Tax Rates Are Enacted 4.14 Consideration of U.S. AMT Credit Carryforwards 4.15 AMT Rate Not Applicable for Measuring DTLs 4.16 Example Illustrating the Application of ASC 740 to the AMT System in the U.S. Federal Jurisdiction 4.17 Consideration of Special Deductions That Are Permitted Under the Tax Law 4.18 Measurement of Basis Differences in an Adjusted Gross Receipts Tax Regime 4.19 Deferred Tax Treatment of Hybrid Taxes 4.20 Applicability of Pushdown Accounting to Income Taxes and Foreign Currency Translation Adjustments
Establishment of a Valuation Allowance for Deferred Tax Assets 4.21 Consideration of Future Events 4.22 Sources of Taxable Income 4.23 Examples Illustrating Sources of Taxable Income 4.24 Evaluating a DTA (for Realization) of a Debt Security Attributed to an Unrealized Loss Recognized in OCI* 4.25 Determining the Pattern of Reversals of Temporary Differences 4.26 Examples Illustrating the Determination of the Pattern of Reversals of Temporary Differences 4.27 Using the Reversal of a DTL for an Indefinite-Lived Asset as a Source of Taxable Income 4.28 AMT Valuation Allowances 4.28A Assessing Realization of a DTA for Regular Tax NOL Carryforwards When an Entity Anticipates Paying AMT Perpetually 4.29 Definition of a Tax-Planning Strategy 4.30 Examples of Qualifying Tax-Planning Strategies 4.31 Examples of Nonqualifying Tax-Planning Strategies 4.32 Recognition and Measurement of a Tax-Planning Strategy
106
106
108 109 111 111
112 112 113
113 115 117 118 119 120 121 122 122
123 124 127 128
132 134 136 137 137
138 141
142 149 150
151 153 155 156 158
vi
Contents
4.33 The "More-Likely-Than-Not" Standard
159
4.34 Examples Illustrating the Measurement of Valuation Allowances When Tax-Planning
Strategies Are Involved
159
4.35 Determination of the Need for a Valuation Allowance Related to FTCs
163
4.36 Definition of "Cumulative Losses in Recent Years"
165
4.37 Consideration of Negative Evidence in the Determination of Whether a Valuation
Allowance Is Required
166
4.38 Cumulative Losses: An Objectively Verifiable Form of Negative Evidence
167
4.39 Going-Concern Opinion as Negative Evidence*
168
4.40 Estimates of Future Income
168
4.41 Effect of Nonrecurring Items on Estimates of Future Income
169
4.42 Example Illustrating the Estimation of Future Taxable Income When Negative Evidence
in the Form of Cumulative Losses Exists
170
4.43 Positive Evidence Considered in the Determination of Whether a Valuation Allowance
Is Required
172
4.44 Additional Examples of Objectively Verifiable Positive Evidence
173
4.45 Example Illustrating the Determination of a Valuation Allowance When It Is More Likely
Than Not That a Portion of Existing Tax Benefits Will Not Be Realized
174
4.46 Reduction of a Valuation Allowance When Negative Evidence Is No Longer Present
176
4.47 Valuation Allowances: Time Frame for Assessing Future Taxable Income
178
Tax Rates Applicable to Items Not Included in Income From Continuing Operations
178
Allocation of Consolidated Tax Expense to Separate Financial Statements of Members
179
4.48 Subsidiary Financial Statements [Deleted]
179
4.49 Acceptable Methods of Allocating Tax to Separate Financial Statements
179
4.50 Preferable Allocation Method for Public Entities
183
4.51 Change in Application of Tax Allocation Methods
183
4.52 Valuation Allowance in the Separate Financial Statements of a Consolidated Group Member 183
4.52A Accounting for Income Taxes in the Balance Sheet of Separate Financial Statements:
DTAs Related to Tax Attributes
184
4.53 Tax Consequences of Tax-Sharing Agreements That Are Not Acceptable for
Financial Reporting Purposes
186
4.54 Reporting Acquisition Debt in Separate Financial Statements
187
4.55 Tax Benefit of the Deductible Interest in the Separate Financial Statements
188
4.56 Application of the Separate Return Method in Combined or Carve-Out Financial
Statements of Multiple Legal Entities, Multiple Divisions, or Both
188
4.57 Allocating Income Taxes to Nonmembers in Carve-Out Financial Statements
189
4.57A Accounting for Taxable Temporary Differences Resulting From Investments in Foreign
Subsidiaries and Foreign Corporate Joint Ventures in Separate Financial Statements
Prepared by Using the Separate Return Method*
190
4.57B Accounting for Income Taxes in the Balance Sheet of Separate Financial Statements:
Unrecognized Tax Benefits and Current Taxes Payable or Receivable*
192
4.58 Disclosure Requirements When an Unincorporated Division's Statement of Revenues and
Expenses Is Presented in a Public Filing [Deleted]
193
4.59 Single Member LLC Tax Allocation
193
4.60 Change From Single Member LLC to Multiple Member LLC (or Vice Versa)
194
4.61 Publicly Held Single Member LLC
194
vii
Contents
Interest and Penalties on Unrecognized Tax Benefits
194
Information Affecting Measurement of Tax Positions
195
4.62 Use of Aggregation and Offsetting in Measuring a Tax Position
195
4.63 Measurement: Weighing of Information
195
4.64 Measuring a Tax Position -- Assigning Probabilities in a Cumulative-Probability Assessment 195
4.65 Cumulative-Probability Table
196
4.66 Cumulative-Probability Approach Versus Best Estimate
196
4.67 Example Illustrating the Measurement of the Benefit of an Uncertain Tax Position
197
4.68 Measurement of Tax Positions That Are Considered Binary
197
4.69 Uncertainty in Deduction Timing
198
4.70 Measurement of Uncertain Tax Positions in Transfer Pricing Arrangements
200
Changes in Tax Laws or Rates
203
4.71 Change in Tax Law That Allows an Entity to Monetize an Existing DTA or Tax Credit in
Lieu of Claiming the Benefit in the Future
203
Deferred Credit Arising From Asset Acquisitions That Are Not Business Combinations
204
Chapter 5 -- Presentation
205
Statement of Financial Position Classification of Income Tax Accounts
205
5.01 Current/Noncurrent Classification of DTLs and DTAs
208
5.02 Presentation of Deferred Federal Income Taxes Associated With Deferred State
Income Taxes
208
5.03 Recognition of Changes in Indemnification Assets Under a Tax Indemnification Arrangement 209
5.04 Valuation Allowance: Classification in a Classified Balance Sheet
210
5.05 Accounting for the Tax Effects of a Change in Tax Accounting Method
212
5.06 Balance Sheet Classification of the Liability for UTBs
213
5.07 Financial Statement Display of Future Obligations to Tax Authorities Under
Regulation S-X, Rule 5-02
214
5.08 Interaction of UTBs and Tax Attributes
214
5.09 Balance Sheet Presentation of UTBs Resulting From Transfer Pricing Arrangements
215
5.10 Presentation of Professional Fees
216
Income Statement Presentation of Certain Measurement Changes to Income Tax Accounts
217
Income Statement Classification of Interest and Penalties
218
5.11 Classification of Interest and Penalties in the Financial Statements
218
Investment Tax Credits Under the Deferral Method
219
Chapter 6 -- Disclosure
Statement of Financial Position-Related Disclosures 6.01 Required Level of Detail 6.02 Definition of "Significant" With Respect to Disclosing the Tax Effect of Each Type of Temporary Difference and Carryforward That Gives Rise to DTAs and DTLs 6.03 Disclosure of Worthless Tax Benefits 6.04 Change in Tax Status to Taxable: Financial Reporting Considerations
220
220 221
221 221 222
viii
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
- tax risk and the cost of equity capital u of i
- asc 740 and valuations of deferred tax assets
- accounting for income taxes deloitte us
- a closer look at accounting for income taxes
- asc 740 fundamentals series taxops
- accounting for income tax beyond the basics of asc 740
- simplifying deferred taxes shippensburg university
- deferred tax a chief financial officer s guide to
- in this issue keep it simple fasb issues asu deloitte
- updated may 2018 pwc
Related searches
- federal income taxes on pensions
- calculate income taxes on paycheck
- can you pay federal income taxes online
- income taxes 2019 table
- federal income taxes 2019
- income taxes by state
- 2019 income taxes due
- 2017 income taxes forms
- pay state income taxes online
- building a roadmap in microsoft
- how are income taxes calculated
- income taxes in portugal