Tax Reporting Changes: ASC Topic 740

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Presented on January 1, 0001

Brian Wong, Principal, Tax Services

Income- and payroll-tax changes resulting from the Families First Coronavirus Response Act (FFCRA) and Coronavirus Aid, Relief, and Economic Security (CARES) Act provisions will need to be reported in companies’ financial statements, covering the periods of enactment, as required by Financial Accounting Standards Board’s Accounting Standard Codification (ASC) Topic 740.

Companies will also need to consider the impact of COVID-19 and provisions of the FFCRA and CARES Act on their valuation allowance analysis, valuation of deferred tax assets, and more. For calendar year-end public companies, these changes take place during the first quarter (Q1) quarterly SEC filings, which are mostly due on May 15—unless a 45-day extension is requested due to COVID-19 relief.

Companies with quarterly SEC filings need to consider whether the provisions should be included in their annual effective tax rate or discretely in the interim period, including the day of enactment.

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