Income Tax Accounting and Deferred Tax Effects

This chapter covers income tax accounting, one of the most conceptually layered parts of FAR. The main issue is separating current tax effects from deferred tax effects and then applying valuation and disclosure rules correctly.

In This Chapter

• Current Tax Expense and Deferred Tax Assets and Liabilities explains the basic current-versus-deferred split.
• Valuation Allowances, NOLs, and Intraperiod Tax Allocation covers important adjustments and allocation issues.
• Uncertain Tax Positions and Related Disclosures addresses uncertainty and note requirements.

How to Use This Chapter

• Separate temporary differences from permanent differences first.
• Focus on what creates a deferred tax item and what changes realizability.
• Return here whenever a FAR miss involves valuation allowance or tax disclosure.

In this section

• Current Tax Expense and Deferred Tax Assets and Liabilities
  FAR calculation and presentation of current tax expense, deferred tax assets, deferred tax liabilities, and temporary differences.
• Valuation Allowances, NOLs, and Intraperiod Tax Allocation
  FAR treatment for deferred tax asset realizability, net operating losses, valuation allowances, and intraperiod allocation.
• Uncertain Tax Positions and Related Disclosures
  FAR coverage of recognition, measurement, more-likely-than-not thresholds, and disclosure for uncertain tax positions.