What does ASC 740 mean?
ASC 740 governs how companies recognize the effects of income taxes on their financial statements under U.S. GAAP. This applies only to taxes based on income—not sales, payroll, or property taxes—per ASC 740-10. Calculating the provision for income taxes under ASC 740 presents a difficult technical challenge.
What is the scope of ASC 740?
What is the scope of ASC 740? ASC 740 establishes standards of financial accounting and reporting for currently payable income taxes as well as deferred income taxes payable at some point in the future.
What is ASC 740 FIN 48?
FIN 48 (mostly codified at ASC 740-10) is an official interpretation of United States accounting rules that requires businesses to analyze and disclose income tax risks. It was effective in 2007 for publicly traded entities, and is now effective for all entities adhering to US GAAP.
Is ASC 740 the same as FIN 48?
ASC 740, formerly known as FIN 48, offers guidance on uncertain tax positions. It is broad in scope and now applies to both nonprofit and for-profit entities.
Do private companies have to follow ASC 740?
ASC 740-10 clarifies requirements of pass-through entities and tax-exempt not- for-profit organizations. Notably, ASC 740 is required only under United States Generally Accepted Accounting Principles (US-GAAP) and is not present in international accounting standards.
Which of the following is outside of the scope of ASC 740?
Withholding taxes that a reporting entity pays to the tax authority on behalf of its shareholders are also outside of the scope of ASC 740.
Is withholding tax an income tax ASC 740?
ASC 740-10-15-4 indicates that a withholding tax for the beneﬁt of the recipients of a dividend is not an income tax of the entity that pays the dividend if certain conditions are met.
Is a withholding tax an income tax for ASC 740?
2 Withholding taxes—entities that pay dividends. ASC 740-10-15-4 indicates that a withholding tax for the beneﬁt of the recipients of a dividend is not an income tax of the entity that pays the dividend if certain conditions are met.