On December 20, 2017, the US Senate and House of Representatives approved the reconciled, final version of the Tax Cuts and Jobs Act. President Trump is expected to sign the bill into law.
The legislation will significantly alter the tax landscape, including accounting for income taxes, known as ASC 740. Other expected changes include a significant reduction in the corporate tax rate, expansion or disallowance of various business deductions, and comprehensive changes to international tax provisions.
If enacted after December 31, 2017, the new law won’t need to be reflected in calendar year companies’ 2017 year-end tax provisions. However, companies will need to assess the impact on their financial statement disclosures.
If the new law is enacted by December 31, 2017, calendar-year companies will be required to include the effects of it in their 2017 year-end tax provisions, creating a significant burden on companies to determine how they’re impacted. Fiscal year-end companies with quarterly reporting will also be required to reflect the effect of the new law in the reporting period that the enactment date falls within.
At a high-level, the major changes that could impact the tax provision and financial statements under ASC 740 are as follows:
Affected companies will be required to:
This legislation, when enacted, will be the largest and most significant change to the tax law in three decades. The challenge will be to have sufficient time and the appropriate involvement of tax specialists, particularly in the international area, to incorporate these changes into the 2017 financial statements and/or disclosures.
If you’d like to better understand how this potential change affects your business, contact your Moss Adams professional or email nationaltaxservices@mossadams.com.