Accounting for outside basis differences in the wake of US tax reform (updated December 19, 2018)

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In depth , PwC US Dec 19, 2018

Tax reform may change companies’ mindset about whether to repatriate foreign earnings. We address the accounting considerations.

Same accounting rules, different mindset

US GAAP guidance for accounting for outside basis differences in foreign subsidiaries has not changed significantly in over 45 years. However, 2017 US tax reform has dramatically changed the landscape for US taxation of foreign earnings. For many companies, that change may shift their operational and treasury mindsets. Marrying the decades-old accounting guidance with a new vision for worldwide cash management may require many accountants to do something they likely have not done much in the past—record deferred tax liabilities for outside basis differences. Doing so may not be as straightforward as it seems.

This In depth was updated on December 19, 2018 to reflect the impact of recent US Treasury proposed regulations and notices.

For a deeper discussion on accounting for outside basis differences, please contact:

Jennifer Spang

Partner, National Professional Services Group, PwC US

Email

Kassie Bauman

Managing Director, National Professional Services Group, PwC US

Email

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David Schmid

International Accounting Leader, National Professional Services Group, PwC US

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