The Tax and Jobs Act was passed by Congress on December 20, 2017, sending the bill for signature to President Trump. The tax law changes included in The Act will have financial statement reporting implications for most companies.
Under FASB ASC 740, Income Taxes, the effect of a change in tax laws or rates are to be recognized on the enactment date. This will result in an adjustment in deferred tax liabilities and assets due to the net effect of such changes. It may also require a re-evaluation of the valuation allowance associated with deferred tax assets. Any adjustments to deferred tax assets or liabilities will need to be reflected in come from continuing operations for the period under which the enactment date falls under.
The enactment date will be based on when President Trump signs the bill, which then becomes the tax law. Accordingly, if this is signed prior to the end of 2017, it will be effective for that calendar year.
If you have any questions regarding the financial or tax implications of the Act, please contact Steve Cupingood at [email protected], or dial 310.477.3924.