How does tax reform affect ASC 740 considerations for domestic and international organizations?
Tax reform will require tax and accounting teams to come together more closely than before to ensure all of the tax law changes are properly reflected in financial statements under ASC 740.
Calendar-year corporations will need to calculate their current taxes at 2017 tax rates, then measure taxes at the new 2018 rates. Fiscal year corporations will have a blended rate. The rules for net operating losses have changed, and valuation allowance may change because of limitations on various deductions.
Some of the most complex considerations are related to international corporations. Bottom line: it’s important to begin evaluating the impacts as soon as possible.