FASB Releases Proposal for Income Tax Disclosures
1. Description of an enacted change in tax law that is probable to have an effect on the reporting entity in a future period
2. Income (or loss) from continuing operations before income tax expense (or benefit) dissaggregated between domestic and foreign
3. Income tax expense (or benefit) from continuing operations disaggregated between domestic and foreign
2. Income (or loss) from continuing operations before income tax expense (or benefit) dissaggregated between domestic and foreign
3. Income tax expense (or benefit) from continuing operations disaggregated between domestic and foreign
4. Income taxes paid disaggregated between domestic and foreign, and the amount of income taxes paid to any country that is significant to total income taxes paid
5. An explanation of circumstances that caused a change in assertion about the
indefiite reinvestment of undistributed foreign earnings and the corresponding amount
5. An explanation of circumstances that caused a change in assertion about the
indefiite reinvestment of undistributed foreign earnings and the corresponding amount
of those earnings
6. The aggregate of cash, cash equivalents, and marketable securities held by foreign
6. The aggregate of cash, cash equivalents, and marketable securities held by foreign
subsidiaries
If the entity is a public company, they would also need to disclose:
If the entity is a public company, they would also need to disclose:
1. Within the reconciliation of the total amounts of unrecognized tax benefits at the
beginning and end of the period, settlements using existing deferred tax assets separate from those that have been or will be settled in cash.
beginning and end of the period, settlements using existing deferred tax assets separate from those that have been or will be settled in cash.
2. The line items in the statement of financial position in which the unrecognized tax
benefits are presented and the related amounts of such unrecognized tax benefits. If the unrecognized tax benefits are not presented in the statement of financial position, those amounts should be disclosed separately.
3. The amount and explanation of the valuation allowance recognized and/or released during the reporting period.
benefits are presented and the related amounts of such unrecognized tax benefits. If the unrecognized tax benefits are not presented in the statement of financial position, those amounts should be disclosed separately.
3. The amount and explanation of the valuation allowance recognized and/or released during the reporting period.
4. The total amount of unrecognized tax benefits that offsets the deferred tax assets
for carryforwards.
It would, however, remove three existing requirements for entities to:
1. Disclose the nature and estimate the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months, or
2. make a statement that an estimate of the range cannot be made.
The proposal would also modify the existing rate reconciliation requirement for public business entities to be consistent with the SEC's Regulation S-X 210.4-08(h), which requires separate disclosure for any reconciling item that amounts to more than five percent of the amount computed by multiplying the income before tax by the applicable statutory federal income tax rate. The proposal would further require an explanation of the changes in those reconciling items from year to year.
Finally, the proposed amendments would require entities provide a description of a legally enforceable agreement with a government--including the duration of the agreement and the commitments made within the government under that agreement and the amount of benefit--that reduces or may reduce its income tax burden. This would not apply, however, in cases where the entity meets the applicable eligibility requirements that are broadly available to taxpayers without specific agreement between the entity and the government.
Stakeholders will have until Sept. 30 to provide comment.
It would, however, remove three existing requirements for entities to:
1. Disclose the nature and estimate the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months, or
2. make a statement that an estimate of the range cannot be made.
The proposal would also modify the existing rate reconciliation requirement for public business entities to be consistent with the SEC's Regulation S-X 210.4-08(h), which requires separate disclosure for any reconciling item that amounts to more than five percent of the amount computed by multiplying the income before tax by the applicable statutory federal income tax rate. The proposal would further require an explanation of the changes in those reconciling items from year to year.
Finally, the proposed amendments would require entities provide a description of a legally enforceable agreement with a government--including the duration of the agreement and the commitments made within the government under that agreement and the amount of benefit--that reduces or may reduce its income tax burden. This would not apply, however, in cases where the entity meets the applicable eligibility requirements that are broadly available to taxpayers without specific agreement between the entity and the government.
Stakeholders will have until Sept. 30 to provide comment.