Tax and financial accounting method differences for leases continue after ASC 842

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March 2020

Overview

Companies transitioning to the new leasing standard ASC 842 for financial reporting may change lease accounting policies, lease terms and conditions, or processes and systems used to track and account for leases.  However, ASC 842 does not impact how leases are treated for federal income tax purposes.  Accordingly, many financial accounting and tax accounting rules continue to differ, and proper tax accounting methods should be applied.

The takeaway

Taxpayers should be aware that ASC 842 does not change income tax accounting treatment for leases.  Accordingly, many financial accounting and tax accounting rules continue to differ, and proper tax accounting methods should be applied.

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Brad White

Brad White

Partner, Accounting Method and Fixed Asset Services Leader, PwC US

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