The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued a revised exposure draft on leases (the Exposure Draft). The May 16 Exposure Draft attempts to address criticisms of the 2010 exposure draft, yet still meet the key objective of recognizing leased assets and liabilities on the balance sheet.
Although the tax law regarding the treatment of leasing transactions remains unchanged, taxpayers should consider how the Exposure Draft will impact the computation of federal and state taxable income and deferred income tax assets and liabilities associated with their leases. In addition, taxpayers should consider potential state tax consequences. As companies assess the impact of the Exposure Draft on their organization, consideration should also be given to tax implications that may require implementation or significant enhancements to systems, processes, and controls in order to comply with the proposed standard.