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Financial Reporting Alert 18-1 — Frequently asked questions about tax reform

Published on: Jun 20, 2018

Originally issued January 3, 2018 (Last updated June 20, 2018)

On December 22, 2017, President Trump signed into law the tax legislation commonly known as the Tax Cuts and Jobs Act (the “Act”).1 Under ASC 740,2 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. 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 FASB Accounting Standards Update No. 2018-02.

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1 H.R. 1/Public Law 115-97, “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.”

2 For titles of FASB Accounting Standards Codification (ASC) references, see Deloitte’s “Titles of Topics and Subtopics in the FASB Accounting Standards Codification.”

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