Accounting for Income Taxes (ASC 740)

Ensuring precise and error-free Income Tax accounting is paramount. Inadequate expertise and insufficient review within a company can lead to accounting errors, potentially resulting in substantial restatements of financial results and disclosures in annual reports. Such restatements can erode investor confidence, decrease shareholder value, and incur significant expenses.

ASC 740, a cornerstone of U.S. GAAP accounting standards, offers crucial guidance for reporting the impacts of Income Taxes resulting from a company’s activities across current and past years. This task, however, is far from straightforward due to several challenging aspects:

  1. Mastery of Complex Skill Sets: Accounting for Income Taxes is a daunting task that necessitates proficiency in two highly technical skill sets: Financial Reporting knowledge and a deep comprehension of Income Tax Laws. Finding individuals with both skill sets, whether in the U.S. or overseas, can be an uphill battle for organizations.
  2. Time Constraints: The timelines for completing Income Tax accounting are stringent, especially for public companies. These deadlines often clash with various tax compliance due dates, leaving internal tax teams with limited time for dedicated focus on tax accounting projects.
  3. Ever-Evolving Tax and Accounting Rules: Staying current with the ever-changing landscape of tax laws, both federal and international, as well as accounting standards by bodies like FASB, presents an ongoing challenge. It can be particularly taxing for internal teams to analyze intricate provisions such as GILTI and BEAT and gauge their impact on tax provisions.
  4. GAAP Conversions: Multinational companies operating across diverse jurisdictions must adhere to various accounting standards within each jurisdiction while also complying with U.S. GAAP as a consolidated entity. Identifying the differences and assessing the tax accounting impact can be a laborious undertaking.

At KNAV, we comprehend the intricacies of tax accounting and provide a comprehensive range of services to support your tax and accounting team:

  1. Tax Accounting Calculations: We can develop quarterly and annual tax provision calculations or review your in-house calculations. Our experts handle complex tax accounting positions, offering consultancy on valuation allowances, business combinations, intra-period allocations, basis evaluations, stock-based compensation, and more.
  2. Auditor Liaison: We facilitate discussions with auditors and draft memos and notes to streamline tax provision calculations and disclosures, saving time and effort for your internal teams, especially during rigorous audit closures.
  3. SPAC/IPO Tax Accounting: When your company is navigating SPAC or IPO processes, we assist with current and deferred tax calculations and presentations as per PCAOB standards.
  4. Uncertain Tax Positions Consultation: We consult and calculate uncertain tax positions (ASC 740-10) on federal and state Income Tax and transfer pricing matters, ensuring compliance with U.S. GAAP and federal tax return reporting requirements.
  5. Tax Balance Sheet Preparation: We help your company prepare tax basis balance sheets, ensuring compliance with regulatory standards to prevent financial restatements.
  6. Tax Provision Software Implementation: If your company implements tax provision software like Onesource Tax Provision, we provide technical support to maximize the benefits of the software for your internal teams.”

Explore Other KNAV Practices

How is KNAV delivering Above & Beyond?

At KNAV, we offer partner/director-led services, guaranteeing top-quality tax and accounting support from seasoned professionals. Our unwavering tax provision team boasts strong technical tax and accounting skills, ensuring reliable and precise services. We possess a profound understanding of tax accounting provisions under various GAAP standards and are committed to meeting strict timelines. By shouldering the tax accounting burden, we free up your internal teams to focus on strategic business aspects, helping you achieve your objectives.

Our Practice leader

Have Questions?

We would love to answer them all