Proposed Changes to The Income Tax Disclosure

The Financial Accounting Standards Board (FASB) proposed to change the income tax disclosure requirements.  The amendments in this proposed update (see the link below) would modify the current disclosure requirements for income taxes for all entities required to account for income taxes under Topic 740.

The following additional proposed disclosures would be required for all entities:

1. Income (or loss) from continuing operations before income tax expense (or benefit) and before intra-entity eliminations disaggregated between domestic and foreign;
2. Income tax expense (or benefit) from continuing operations disaggregated between federal, state, and foreign; and
3. Income taxes paid disaggregated between federal, state, and foreign.

The following proposed disclosures would be required for public business entities:

1. 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;
2. The amount and explanation of the valuation allowance recognized and/or released during the reporting period; and
3. The total amount of unrecognized tax benefits that offsets the deferred tax assets and carryforwards.

The amendments in this proposed update would be applied prospectively.  Comments must be submitted to FASB by May 31, 2019.

https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176172382198&acceptedDisclaimer=true

The Proposed Regulations under the Foreign-Derived Intangible Income Regime

The IRS and Treasury released proposed regulations under IRC Section 250 on March 4^th, 2019 (the “Proposed Regulations”).  The Proposed Regulations provide guidance with respect to special federal tax deduction under the new foreign-derived intangible income regime enacted as part of the 2017 tax reform effective for tax year 2018.  Under this regime, domestic corporations with qualifying income is allowed a deduction equal to 37.5% of their foreign-derived intangible income and 50% of their global intangible low-taxed income.

The Proposed Regulations provide guidance related to the mechanics of determining a domestic corporations foreign-derived intangible income, the application of the deduction in the consolidated group and partnership structure, and the its interplay with IRC sections 163(j), 172(a) and 78.  Most importantly, the Proposed Regulations requires contemporaneous documentation requirement for companies claiming deductions under the regime.

Please click on the link below to view the Proposed Regulations.

https://s3.amazonaws.com/public-inspection.federalregister.gov/2019-03848.pdf

Proposed Accounting Standards Update – Share-Based Consideration Payable to a Customer

Financial Accounting Standards Board (“FASB”) proposed amendments to ASC 718 which requires entities to apply the guidance in ASC 718 to measure and classify equity instruments granted in connection with the sale of goods or services to customer.  Under the proposed amendment, entities are required to measure share-based payments to customers using the grant-date fair value of the share-based payment award and the amount would be recorded as a reduction in revenue.  The grant date is the date at which a grantor and a grantee reach a mutual understanding of the key terms and conditions of a share-based payment award.

Comments are due by April 18, 2019.

Please click on the link below to view the proposed amendment.

https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176172244836&acceptedDisclaimer=true