Case studies for book-tax differences in the classroom

Financial accounting and tax professionals today face a bewildering maze of computational, disclosure, and reporting requirements related to income tax accrual. GAAP financial statements must comply with Accounting Standards Codification (ASC) Topic 740, Income Taxes (formerly FAS 109, Accounting fo...

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Bibliographic Details
Published in:The Tax Adviser 2010-08, Vol.41 (8), p.568
Main Authors: Hennig, Cherie J, Raabe, William A, Everett, John O
Format: Magazinearticle
Language:English
Subjects:
Accounting
Accrual basis accounting
Accruals
Capital gains
Capital losses
Case studies
Compliance
Corporate income tax
Debt
Deferred income taxes
Disclosure
Disclosure (Taxation)
Doubtful account allowances
Financial accounting standards
Financial statements
GAAP
Laws, regulations and rules
Liability
Reporting requirements
Tax accounting
Tax benefits
Tax rates
Tax regulations
Tax returns
Valuation
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Summary:Financial accounting and tax professionals today face a bewildering maze of computational, disclosure, and reporting requirements related to income tax accrual. GAAP financial statements must comply with Accounting Standards Codification (ASC) Topic 740, Income Taxes (formerly FAS 109, Accounting for Income Taxes, and FIN 48, Accounting for Uncertainty in Income Taxes), which requires accruals for the tax benefit (liability) of temporary book -tax differences and footnote disclosure of uncertain tax positions. In addition, the effective tax rate footnote must disclose the tax benefit (liability) of permanent book-tax differences. For corporate and passthrough entities with assets greater than $10 million, the IRS requires disclosure of both permanent and temporary book-tax differences on Schedule M-3. The IRS recently-released a draft of Schedule UTP, Uncertain Tax Position Statement, which will also require corporate Schedule M-3 filers to provide a detailed analysis of current and prior tax year uncertain tax positions. These disclosure and reporting requirements raise questions as to how to most effectively cover book-tax differences in financial accounting and tax courses and how to prepare accounting graduates for this type of work in the profession.
ISSN:0039-9957