ASC 740: Frequently Asked Questions

By Davinia Lyon

In a continuing series, Davinia Lyon answers frequently asked questions about ASC 740, a complex and time-consuming set of corporate standards.

Accounting for income taxes (ASC 740) is a set of income tax standards requiring public companies to analyze and disclose income tax risks. The implications of getting it wrong–financial restatements and financial disclosures–can impact investor confidence and shareholder value as well as lead to significant remediation costs and business distractions.
Complying with ASC 740 is challenging for public companies due to the knowledge and experience needed to meet the significant tax and financial reporting requirements. For companies without an internal tax department, the challenge is greater. Learn more with this instant download.

• What is ASC 740?
• Why should companies be concerned with ASC 740?
• What is the scope of ASC 740?
• What income taxes are covered by ASC740?
• What is a tax position?
• What is an “uncertain tax position”?
• How is an uncertain tax position determined?
• Why is complying more challenging for private than public companies?
• What is the difference between ASC 740 and ASC 740-10?

If after reading you have questions, please do not hesitate to get in touch.

Need just the basics? Download a Closer Look at ASC 740.

Explore how accounting for uncertain tax positions can reduce your tax risk, smooth out tax liabilities, and improve financial statement transparency in A Closer Look at ASC 740: Accounting for Income Taxes. Having the in-depth knowledge, tax technical understanding, and experience to manage estimates and assumptions related to tax provisions is critical to getting ASC 740 calculations and disclosures right. The requirements and common pitfalls of complying with ASC 740 are explored in this White paper as we answer:

· Why do companies struggle with accounting for income taxes?
· Why does accounting for income taxes matter?
· What are the common pitfalls associated with accounting for income taxes?
· How do I get started?

Learn More

“A Practical Approach to ASC 740”

November 11, 2021 | 1:00-4:30 pm MT

A 3 1/2 hour CPE class delving into the basic concepts and practical implications of accounting for income taxes, sponsored by CPE4U. Registration Opening Soon. Subscribe to Tax News for registration details.

Learning Objectives

• Understand the principles of ASC 740, types of taxes and the business application
• Connect the dots on a provision with receivables, deferred taxes and liabilities, uncertain tax position, valuation allowance and tax expense
• Recognize the difference between accounting estimates and errors, and the impact of variable tax rates on each component
• Appreciate income tax accounting for stock-based compensation
• Identify legal, regulatory and situational issues that impact accounting for income taxes
• Explain the impact of business combinations on ASC 740
• Define the transfer pricing methodology as it relates to ASC 740
• Learn how to communicate with auditors
• Distinguish between International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) tax accounting treatment
• Explore frequently asked questions

Faculty

Davinia Lyon, CPA, partner at TaxOps

Davinia Lyon is a dynamic and diversified tax expert with more than 25 years of public and private accounting experience. She specializes in corporate and international tax and planning, including income tax provisions (ASC 740), business strategy tax impact analysis, transfer pricing, foreign compliance and reporting, M&A transaction and entity restructuring. She counsels clients under audit and in their efforts to develop corporate tax departments and related support areas. Formerly with EY, Davinia came to TaxOps from Jacobs Engineering, where as senior tax director of global tax accounting and transfer pricing, she oversaw the integration of international tax teams in the merger with CH2M in December 2017, creating a $15 billion in revenue combined entity. Davinia holds a Master of Taxation from the University of Denver and an Accounting and Business Administration degree from Dordt College.

Lindsay Haskell, CPA, senior tax manager at TaxOps

With an eye for what is practical, Lindsay Haskell brings private and public sector experience in corporate, income tax provision (ASC 740) and compliance as well as indirect tax experience to creating solutions that work for businesses.  Previously, Lindsay spent time at EY handling tax compliance and provision for corporate, international, federal, and state and local projects. She also worked in private industry at Webroot Inc., which was acquired by carbonite, Inc., in March 2019, where she performed cross-functional compliance and planning integration across tax disciplines. Lindsay holds a Master of Science in Accountancy from Bentley University McCallum Graduate School of Business.

Sponsored by CPE4U

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