Originally issued January 3, 2018 (Last updated August 30, 2018)

On December 22, 2017, President Trump signed into law the tax legislation commonly known as the Tax Cuts and Jobs Act (the “Act”). Under ASC 740, the effects of new legislation are recognized upon enactment, which (for federal legislation) is the date the president signs a bill into law. Accordingly, recognition of the tax effects of the Act is required in the interim and annual periods that include December 22, 2017.

This Financial Reporting Alert contains responses to frequently asked questions (FAQs) about how an entity should account for the tax effects of the new tax reform legislation in accordance with ASC 740, Income Taxes. The following is a high-level summary of the updates to the Financial Reporting Alert since its initial release on January 3, 2018:

• Updated on January 19, 2018, to address a number of additional FAQs and to reflect the activities of the FASB and its staff.
• Updated on March 20, 2018, to cover a number of additional FAQs (e.g., a new section on interim considerations was added) and to incorporate guidance that previously appeared separately in Financial Reporting Alerts 18-3 and 18-4.
• Updated on June 20, 2018, principally to provide a new section related to the adoption of ASU 2018-02 on reclassifying certain tax effects from accumulated other comprehensive income.
• Updated on August 30, 2018, principally to amend, add, or delete certain FAQs related to measuring the U.S. deferred tax impact of future global intangible low-taxed income inclusions for companies that have elected or will elect to use the deferred method.

While the answers to the FAQs reflect our views at this time, those views are subject to change on the basis of additional guidance, input received, or further developments in practice. We plan to update the Financial Reporting Alert continually to reflect developments as they occur and as additional questions surface.

This publication was released by our US firm.

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