Tax considerations when adopting the new revenue standard

Tax accounting insights Aug 22, 2017

Overview

As companies analyze the impact of adopting the FASB's new revenue standard and the go-forward financial statement implications, they should also consider how each identified change will affect both revenue recognition for tax purposes and the accounting for income taxes. This paper highlights key areas in the tax provision that may be impacted by the standard, and provides a discussion as to the underlying tax law that may drive these impacts.

Key actions for addressing the revenue standard

As companies prepare to adopt the new revenue standard, tax implications and opportunities should be considered at each step of the implementation process. Key actions items may include:

  • Connect with accounting colleagues leading revenue recognition readiness initiatives to ensure tax is integrated into the process.
  • Understand potential changes in pre-tax revenues or costs arising under the new standard.
  • Inventory jurisdictions for which a tax assessment will need to be performed.
  • Assess how pre-tax changes may impact tax in each jurisdiction.
  • Consider knock-on effects such as changes to state taxes, transfer pricing results, and information reporting.
  • Evaluate the effects of changes to any tax-related financial statement line item as a result of adoption and assess these effects as direct or indirect under ASC 250.
  • Ensure systems are capable of providing necessary tax information.
  • Implement changes to processes and controls that are needed on a go-forward basis.

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US TAS Market Leader
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