Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, this week’s host, and I’m here with Chip Schweiger, and audit director and a member of the PKF Texas SEC team. Chip welcome back to the Playbook.
Chip: Thanks Jen, good to be here.
Jen: So President Trump signed into law the Tax Act on December 21, 21017, it’s got a lot in it; what do SEC companies need to know that’s going to affect them?
Chip: Well Jen you’re exactly right in that this is the most significant change in tax laws in the last 30 years. The staff of the SEC recently issued guidance on the accounting and reporting impacts of the tax law in Staff Accounting Bulletin 118 to in their words address situations where the reporting under ACS 740 is incomplete for the effects of Tax Act upon issuance of an entities financial statements.
Jen: Chip so you mentioned Staff Accounting Bulletin 118 – SAB 118; what does that require?
Chip: SAB 118 establishes a three part process for companies to follow when accounting and reporting the income tax effects of the Tax Act in financial statements that include a reporting period in which the new Tax Act was enacted. So one, they should reflect the income tax effects of the Tax Act in which the accounting under ASC 740 is complete on a non-provisional basis. Two, they should report provisional amounts for those specific income tax effects of the Tax Act for which the accounting under ASC 740 is incomplete, but a reasonable estimate can be determined. And three, they should continue to apply ASC 740 based on the provisions of the tax laws that were in effect immediately prior to the enactment of the new Tax Act for any specific income tax effects of the Tax Act for which a reasonable estimate cannot be determined.
Jen: Wow that sounds like a lot. Where can a company go to get more information?
Chip: Companies can either visit the SEC’s website at SEC.gov or they can talk to any PKF Texas advisor.
Jen: Well let’s get them to call us first.
Chip: Sounds good.
Jen: Thanks for being here Chip, we really appreciate it.
Chip: My pleasure.
Jen: For more about this topic visit our SEC desk on PKFTexas.com. This has been another Thought Leader production brought to you by PKF Texas The Entrepreneur’s Playbook, tune in nest week for another chapter.
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