Tax Bill Signed
With President Trump signing the “Tax Cuts and Jobs Act” on Friday, we are witnessing the most significant change to the tax code since 1986. The bill passed in the House Tuesday (227-203) and then passed in the Senate (51-48) early Wednesday morning. Due to some minor changes to the bill in the Senate, it returned to the House Wednesday, where it again passed (224-201). See our recent post on details of tax reform here.
With today’s signing, tax reform will be ‘enacted’ prior to December 31, 2017. Therefore, calendar year companies will be required to adjust the tax rate used to calculate deferred taxes to 21% for their 12/31/2017 financials. Both ASC 740 and SSAP 101 require the use of tax rates that are enacted during the period of the applicable financials.
Companies with a fiscal year end will update the deferred tax rate during the financial period that includes the date the bill was enacted. Additionally, for fiscal year end companies that have not yet issued their financial statements, subsequent event disclosure requirements are applicable.