PwC is pleased to offer our updated comprehensive guide on the accounting for income taxes. This guide focuses on the accounting and financial reporting considerations for income taxes. It supplements information provided by the authoritative accounting literature and other PwC guidance.
This guide summarizes the applicable accounting literature, including relevant references to and excerpts from the FASB’s Accounting Standards Codification (the Codification). It also provides our insights and perspectives, interpretative and application guidance, illustrative examples, and discussion on emerging practice issues.
This guide should be used in combination with a thorough analysis of the relevant facts and circumstances, review of the authoritative accounting literature, and appropriate professional and technical advice.
References to US GAAP
Definitions, full paragraphs, and excerpts from the FASB’s Accounting Standards Codification are clearly labelled. In some instances, guidance was cited with minor editorial modification to flow in the context of the PwC Guide. The remaining text is PwC’s original content.
References to other PwC guidance
This guide provides general and specific references to chapters in other PwC guides to assist users in finding other relevant information. References to other guides are indicated by the applicable guide abbreviation followed by the specific section number. The other PwC guides referred to in this guide, including their abbreviations are:
- Business combinations and noncontrolling interests (BCG)
- Consolidation (CG)
- Equity method investments and joint ventures (EM)
- Financial statement presentation (FSP)
- Financing transactions (FG)
- Foreign currency (FX)
- Property, plant, equipment and other assets (PPE)
- Stock-based compensation (SC)
Summary of significant changes
The following is a summary of recent noteworthy revisions to the guide. Additional updates may be made to future versions to keep pace with significant developments.
Revisions made in June 2023
- TX 184.108.40.206 was added to discuss the accounting for purchased income tax credits.
- TX 1.4.4 was added to discuss the accounting for state tax levied on pass-through entity income.
- TX 220.127.116.11A was removed because ASU 2019-12 is now effective for all companies.
TX 3, Book versus tax basis differences
- The content specific to low-income housing credits previously included in TX 3.3.6 was moved to TX 3.3.6A. TX 3.3.6 now includes guidance on the application of ASU 2023-02, Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force).
TX 12, Intraperiod tax allocation
- TX 12.3 and TX 12.4 were updated to remove guidance that is no longer applicable because ASU 2019-12 is now effective for all companies.
- Question TX 12-2 was added to provide an example of the application of ASC 740-20-45-15 through ASC 740-20-45-18 when an entity has a change in valuation allowance related to a DTA for unrealized losses on available-for-sale debt securities. Questions after that were renumbered accordingly.
Revisions made in March 2023
TX 4, Recognition and measurement
- TX 4.3.7 was added to discuss accounting considerations of the Organisation for Economic Cooperation and Development’s Global Anti-Base Erosion minimum tax.
Revisions made in December 2022
- TX 1.2.4 was updated to discuss the accounting for nonrefundable transferable credits.
TX 4, Recognition and measurement
- TX 4.3.6 was added to discuss accounting considerations of the Corporate Alternative Minimum Tax (CAMT).
TX 5, Valuation allowance
- TX 18.104.22.168 was added to discuss the interaction of the CAMT with deferred taxes and valuation allowances.
This publication has been prepared for general informational purposes, and does not constitute professional advice on facts and circumstances specific to any person or entity. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication. The information contained in this publication was not intended or written to be used, and cannot be used, for purposes of avoiding penalties or sanctions imposed by any government or other regulatory body. PricewaterhouseCoopers LLP, its members, employees, and agents shall not be responsible for any loss sustained by any person or entity that relies on the information contained in this publication. Certain aspects of this publication may be superseded as new guidance or interpretations emerge. Financial statement preparers and other users of this publication are therefore cautioned to stay abreast of and carefully evaluate subsequent authoritative and interpretative guidance.
The FASB Accounting Standards Codification® material is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, Norwalk, CT 06856, and is reproduced with permission.