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FASB to Monitor Financial Reporting Impact of Tax Reform

November 30, 2018

The Financial Accounting Standards Board (“FASB”) has no plans to issue new guidance on the Tax Cuts and Jobs Act (“TCJA”). During a November 14 meeting on the financial reporting impact of tax reform, FASB researchers said Big Four firms’ guidance, FASB accounting staff’s technical inquiries, and U.S. GAAP have helped companies answer some of the complicated financial reporting issues caused by the tax law change.

Despite holding off on issuing new tax reform guidance, the FASB still plans to monitor whether any necessary future action should be taken. The staff will especially keep a close eye on the global intangible low-taxed income (“GILTI”) regime, a provision introduced by the TCJA that imposes a minimum tax on select foreign earnings. FASB fellow Jason Bond said the board should continue examining how companies that pay taxes on GILTI account for and disclose its effects.

Companies have asked the FASB whether deferred tax assets and liabilities must be disclosed for basis differences anticipated to reverse as GILTI in later years, or if the tax on GILTI must be added in tax expense during the incurred period. In a Staff Q&A document on tax reform issued in January, the FASB said Accounting Standards Codification 740, Income Taxes, could permit either interpretation; however, it depends on a company’s circumstances.