Project Update

Disclosure Framework—Disclosure Review: Income Taxes

Last updated on October 26, 2015. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

Project Objective and Overview
*Decisions Reached at Last Meeting
*Tentative Board Decisions Reached to Date
*Next Steps
*Board/Other Public Meeting Dates
Contact Information

Project Objective and Overview

The objective and primary focus of the Disclosure Framework project is to improve the effectiveness of disclosures in the notes to financial statements by clearly communicating the information that is most important to users of each entity’s financial statements. Achieving the objective of improving effectiveness requires development of a framework that promotes consistent decisions about disclosure requirements by the Board and the appropriate exercise of discretion by reporting entities.

To achieve that objective, the Disclosure Framework project comprises two components: the Board’s Decision Process and the Entity’s Decision Process.

Currently, four disclosure areas are being evaluated as part of the Disclosure Framework project. Each review will include (1) evaluation of existing disclosure requirements within the Topic after applying the concepts in the Board’s decision process and (2) promotion of the appropriate use of discretion by entities specifically within the Topic.

This page provides updates on the disclosure review of Income Taxes (740-10-50). For information on the other three disclosure reviews, see the following:
  1. Defined Benefit Plans (715-20-50)
  2. Fair Value Measurement (820-10-50)
  3. Inventory (330-10-50)
Additionally, disclosure requirements for Interim Reporting are being evaluated for modifications.

The FASB staff has developed a “Q&A: FASB’s Disclosure Framework Project” fact sheet which can be viewed here.

*Decisions Reached at Last Meeting (October 21, 2015)

Disclosure Framework: Disclosure Review—Income Taxes. The Board discussed income tax disclosures and decided that entities would be required to disclose the following:
  1. That a change in tax law has been enacted, and it is probable that the change will affect the reporting entity in a future period
  2. If deferred taxes are not presented as a separate line item in the balance sheet, the line item(s) in which the amount is presented
  3. Domestic income taxes paid and foreign income taxes paid
  4. An explanation of the nature and amounts of the valuation allowance recorded and released during the reporting period.
The Board also decided that all entities should disclose the rate reconciliation currently required in GAAP only for public companies. Furthermore, the current requirement would be modified to include:
  1. If an individual reconciling item amounts to more than 5 percent of the amount computed by multiplying the income before tax by the applicable statutory federal income tax rate, disclose that amount separately
  2. A qualitative description of those items that have caused a significant movement in the rate year over year.
The Board decided to revise the carryforward disclosure requirements to require that all entities disclose:
  1. The amounts and expiration dates of the carryforwards recorded on the tax return (not tax effected)
  2. The amounts and expiration dates of the carryforwards that will give rise to a deferred tax asset (tax effected)
  3. The total amount of the unrecognized tax benefit that offsets the tax-effected carryforwards.
The Board directed the staff to perform further outreach on all of the potential changes to income tax disclosures.

*Tentative Board Decisions Reached to Date

Tentative Board Decisions Reached to Date

*Next Steps

The staff will perform further outreach on all of the potential changes to income tax disclosures.

*Board/Other Public Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.

*October 21, 2015 Board Meeting—Disclosure Review
August 26, 2015 Board Meeting—Disclosure Review
February 11, 2015 Board Meeting—Disclosure Review
January 7, 2015 Board Meeting—Disclosure Review
April 4, 2014 Board Meeting—Field Study Results and Next Steps

Contact Information

Nick Cappiello
Supervising Project Manager

Jaime Dordik
Assistant Project Manager

Kristin Floyd
Postgraduate Technical Assistant

Carter Meneley
Postgraduate Technical Assistant