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End of SEC Tax Reform Grace Period Could Increase Disclosures

Last December after the Tax Cuts and Jobs Act (“TCJA”) was signed into law, the Securities and Exchange Commission (“SEC”) issued interpretative guidance that allows companies to use good faith estimates to adapt to the income tax effects. With the guidance expiring soon, the agency is advising businesses to apply the income tax disclosure requirements under U.S. GAAP once the grace period ends. SEC Staff Accounting Bulletin (“SAB”) No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, allows businesses to use reasonable estimates and provisional amounts to calculate the new tax law’s impact. SAB No. 118 also. Read More.

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Tax Reform Could Impact Campus Parking and Transit Benefits

With little guidance provided on the Tax Cuts and Jobs Act, colleges and universities are uncertain how to handle tax law changes related to campus parking. College and university officers worry that the lack of guidance will lead to new taxes on employee parking, even if free parking is a benefit. Officers are also concerned that they will be taxed on upkeep for employee parking lots. Another unresolved issue relates to handling pretax transit programs. Colleges could face taxes on employees who use a pretax account to pay for public transportation to work. Such taxes, however, may be avoided if. Read More.

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SEC Guidance on Tax Reform Added to FASB Codification

Last month, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that amends certain Securities and Exchange Commission (“SEC”) guidance under Topic 740 related to the Tax Cuts and Jobs Act. ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, adds guidance to the FASB Accounting Standards Codification that answers questions regarding how certain income tax effects from the Tax Cuts and Jobs Act should be applied to companies’ financial statements. The guidance also lists which financial statement disclosures are required under a measurement period approach. More on ASU No. 2018-05 is available on FASB.org.

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FASB to Review Backwards Tracing Related to Tax Reform

The Financial Accounting Standards Board’s (“FASB”) research team plans to review how the tax code changes stemming from the Tax Cuts and Jobs Act (“TCJA”) will impact backwards tracing, which is a practice U.S. GAAP currently prohibits. Backwards tracing is a practice in which the impact of a change in a deferred tax credit or charge is included in the same line item wherein the deferred taxes were initially recorded. According to FASB staff member Jason Bond, the board wants to review the costs of backwards tracing and consider alternatives to determine whether the benefits outweigh the costs. Bond remarked. Read More.

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SEC to Help Companies Disclose Tax Reform Effects

At a recent SEC Speaks event in Washington, D.C., Securities and Exchange Commission (“SEC”) chief accountant Wesley Bricker told attendees that the commission intends to help public companies with disclosures on their periodic filings related to the impact of the Tax Cuts and Jobs Act (“TCJA”). In his remarks, Bricker referenced Staff Accounting Bulletin No. 118, (Topic 5.EE), Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which was issued in December 2017. The bulletin covers the judgments and assumptions that a company’s management must make when including the effects of tax reform into financial statements. It also. Read More.

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FASB Finalizes Standard Related to Tax Reform

The Financial Accounting Standards Board (“FASB”) has issued an Accounting Standards Update (“ASU”) concerning certain stranded income tax effects in accumulated other comprehensive income caused by the Tax Cuts and Jobs Act. ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, gives financial statement preparers the option to reclassify stranded tax effects in accumulated other comprehensive income to retained earnings in every period wherein the impact of the new corporate income tax rate in the new tax law (or portion thereof) is recognized. As a result of the new guidance,. Read More.

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