From a disclosure standpoint, if tax-related regulatory assets or liabilities are material to the financial statements, disclosures similar to those provided for deferred income taxes should be provided. This would include information related to the likely reversal pattern for the regulatory assets and liabilities and necessary regulatory actions that are expected to occur in the future.

Regulated utilities should also consider separately presenting or disclosing the amount of income tax expense recovered in rates as part of operating income (“above the line”) and income tax expense related to the unregulated operations as part of the traditional income tax expense line item (“below the line”). For example, if a regulated utility records miscellaneous revenues or gains on the sale of property when such revenues or gains are not considered in the ratemaking process, the related income taxes would be reported “below-the-line.” Although this reporting is not a requirement under U.S. GAAP, separate presentation and/or disclosure of these portions of the income tax provision can provide useful information to financial statement users.