Blog: Helping with your ASC 740 needs

Presented by ASC 740 Advisory

With calendar fiscal year 2025 coming to end, public companies race to prepare and adopt new income tax accounting disclosure requirements mandated by Accounting Standards Codification no. 2023-09 (ASC 2023-09 or “new standard”). Private companies have an extra year until calendar fiscal year 2026 for a mandatory adoption. FASB’s new standard radically changed public companies’ income tax footnote disclosures of (1) tabular reconciliations of statutory tax amount and rate to an effective tax amount and rate, and (2) income tax paid in the federal, states, and foreign jurisdictions (“income tax payments” disclosures). While private companies are not required to provide a tabular format of a tax rate reconciliation (they are allowed to substitute descriptive disclosures of tax rate reconciliation drivers), they will have to disclose (i) income tax payments, (ii) pretax income breakdown of domestic and foreign, and (iii) total federal, states, and foreign jurisdictional provisions.

The new standard's requirements are quite descriptive, leaving little room for mistakes (FASB noted that the general materiality guidance in the Codification applies to the requirements of the new standard). A successful adoption of the new standard necessitates a multifaceted approach by tax and accounting departments, as there are:

• Complex accounting/tax technical issues.
• Tax accounting technology systems and templates reconfiguration.
• Internal control changes and implications.

For more details on the new standard, refer to this collaboration with Bloomberg Tax: FASB’s New Disclosure Requirements (ASU 2023-09): An Explainer.

Florida companies and accounting firms can bolster their in-house tax accounting teams and capabilities with external service providers such ASC 740 Advisory, a service offered by Yosef Barbut – a tax accounting veteran with many years of technical and practical experience in accounting for income tax.

Yosef was BDO USA’s tax accounting leader and prior to that a director in PwC’s National Office Tax Accounting team. He logged hundreds of hours of technical consultations; prepared, participated and led technical trainings; and co-authored many publications on the topic. He has published a few tax accounting articles with Bloomberg and has taught accounting at a university. Yosef also led a team of accountants responsible for the global tax accounting consolidation preparation and reporting of a New York City multinational media corporation where he gained fluency in working in-house for a global conglomerate, multi-divisional business.

Accounting for income tax continues to be challenging for preparers and their advisors. In recent years, more complexity was added by the proliferation of new income tax credits investments, green-energy tax credits, book-basis minimum tax, major international tax development (OECD’s Global Minimum Tax), and domestic legislation as the One Big Beautiful Bill Act (President Trump’s second signature tax reform enacted in July 2025). FASB’s continuous updating of accounting standards to meet ever changing business landscapes such as investments in tax credits, crypto assets, artificial intelligence, and new business models, such as share-based compensation/performance award given to a customer, add more complexity.     

Leveraging the expertise of ASC 740 Advisory can alleviate the stress and help manage the risk inherent in accounting for income tax work and financial reporting.  

ASC 740 Advisory can prepare, review, and reconcile income tax provisions; write or edit work papers and memorandums; analyze, research and prepare supporting documentations for major transactions or accounts, such as a business combination, valuation allowance or FIN 48 accounting; train internal teams on new tax developments and accounting standards; and review and improve internal controls of financial reporting income tax.

Contact ASC 740 Advisory at (305) 515-9626 or joeacc101@outlook.com.