ASC 740 — Income Taxes
The full text of ASC 740, Income Taxes, can be found in the FASB Accounting Standards Codification (link to the FASB's Web site; registration required). Also, the full text of the Codification and Deloitte-authored Q&As related to the Codification are available in the Deloitte Accounting Research Tool (DART) Web site (subscription required).
ASC 740 comprises four Subtopics (Overall, Intraperiod Tax Allocation, Other Considerations or Special Areas, and Interim Reporting). Below is an overview of each Subtopic.
ASC 740-10 notes the following:
This Subtopic provides guidance for recognizing and measuring tax positions taken or expected to be taken in a tax return that directly or indirectly affect amounts reported in financial statements. This Subtopic also provides accounting guidance for the related income tax effects of individual tax positions that do not meet the recognition thresholds required in order for any part of the benefit of that tax position to be recognized in an entity's financial statements. Under this Subtopic, a tax position is first evaluated for recognition based on its technical merits. Tax positions that meet a recognition criterion are then measured to determine an amount to recognize in the financial statements. That measurement incorporates information about potential settlements with taxing authorities.
740-20 Intraperiod Tax Allocation
ASC 740-20 notes the following:
This Subtopic addresses the process of intraperiod tax allocation that allocates total income tax expense or benefit of an entity for a period to different components of comprehensive income and shareholders' equity. This includes allocating income tax expense or benefit for the year to:
This Subtopic provides guidance on the method for making those allocations of total income tax expense or benefit and provides several examples and illustrations.
740-30 Other Considerations or Special Areas
ASC 740-30 notes the following:
This Subtopic provides the required accounting and disclosure guidance for certain of the specific limited exceptions identified in Subtopic 740-10 to the requirements to record deferred taxes on specific basis differences related to investments in subsidiaries and corporate joint ventures arising from undistributed earnings or other causes.
The accounting addressed in this Subtopic represents, in some situations, an exception to the otherwise required comprehensive recognition of deferred income taxes for temporary differences.
740-270 Interim Reporting
ASC 740-270 notes the following:
This Subtopic describes:
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FASB Accounting Standards Updates
The following ASUs amended the guidance in this Topic:
- ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory (issued October 2016, effective December 15, 2017, for public business entities).
- ASU 2015-17, Balance Sheet Classification of Deferred Taxes (issued November 2015, effective December 15, 2016, for public entities).
- ASU 2014-09, Revenue From Contracts With Customers (issued May 2014; effective December 15, 2016, for public entities).
- ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force) (issued July 2013; effective December 15, 2013, for public entities and December 15, 2014, for nonpublic entities).
- (issued October 2012; effective December 15, 2012, for public entities and December 15, 2013, for nonpublic entities).
- (issued February 2010; effective December 15, 2009).
- (issued January 2010; effective December 15, 2009).
- (issued September 2009; effective September 15, 2009).
Proposed FASB Accounting Standards Updates
See our comprehensive collection of news and publications related to income taxes.
For the IASB's guidance on this topic, see IAS 12, Income Taxes.