New white papers on accounting for income taxes

We have published the following five white papers on accounting for income taxes under Financial Accounting Standards Board Accounting Standards Codification (ASC) 740, Income Taxes:

Updates from Dec. 20, 2023

• Accounting for income taxes: Valuation allowance – This white paper addresses the realizability or recoverability of deferred tax assets using the more-likely-than-not standard (i.e., a valuation allowance would be recognized if it is more likely than not that some or all of the deferred tax asset will not be realized). This white paper also discusses the sources of taxable income and types of evidence to consider when determining whether to record a valuation allowance.
• Accounting for income taxes: Interim period tax reporting – This white paper addresses income tax reporting for interim periods within an annual period and provides guidance on how to calculate an estimated annual effective tax rate, together with guidance on identifying discrete items, which are reflected in the period incurred.

Updates from Dec 15, 2023

• Accounting for income taxes: Book vs. tax basis differences – This white paper addresses the accounting for book versus tax basis differences that arise when the carrying amount of an asset or liability differs from its tax basis. These differences can result in temporary or permanent differences between book and taxable income. This paper also discusses carryforwards, which are tax attributes that can be used to offset future taxable income (e.g., net operating losses, capital losses and tax credits).
• Accounting for income taxes – Determining the applicable tax rate – This white paper addresses the tax rate that is used to calculate the amount of current taxes payable and refundable, and deferred tax assets and liabilities, including the amount of income tax expense or benefit that should be recognized in the financial statements.
• Accounting for income taxes: Current and deferred taxes – This white paper addresses how to determine current taxes payable or refundable, deferred tax assets, and deferred tax liabilities, which form the basis for the income tax amounts recorded on an entity’s financial statements. This white paper also addresses the income tax rate reconciliation, which is a required disclosure for public entities.

These white papers do not address every aspect of accounting for income taxes and should therefore be read in conjunction with the authoritative guidance in ASC 740.