ASC 740

Companies that relied on Staff Accounting Bulletin 118 will need to complete and disclose the results of their provisional estimates within the 12-month measurement period that began in December 2017.

To assess the need for valuation allowance, the following should be considered:

  • Section 162 (m) compensation limitations–including consideration for transitional guidance under Notice 2018-68
  • Section 163 (j) interest expense limitations
  • Global Intangible Low-Taxed Income (GILTI)
  • Future ability to utilize foreign tax credits
  • Any new regulations issued by end of 2018
  • Utilization and expiration of net operating losses and credit carryforwards

Planning Opportunities

Companies that previously placed valuation allowances on certain deferred assets—such as net operating losses—may now be able to record the benefit of losses created in 2018 and future periods due to their new permanent life. New guidance has clarified some of the tax law changes that could impact previous estimates recorded by companies.

More Resources

In part two of our tax reform webcast series, we’ll look at how companies will need to address the effects of new tax laws in their 2017 financial statements, disclosures, or both under Financial Accounting Standards Board Accounting Standards Codification® Topic 740 requirements.

Companies will need to consider the effects of President Trump’s tax reform in their 2017 financial statements and/or disclosures under ASC 740 requirements.