Corporate Tax Accounting

Tax Provision & ASC 740

Income tax accounting under US GAAP. Deferred tax, valuation allowances, uncertain tax positions, and OBBBA provision impact for corporate tax directors and Big Four practitioners.
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ASC 740 governs income tax accounting under US GAAP. It requires companies to recognize current and deferred income taxes based on differences between GAAP and tax-basis income - a regime that interacts with virtually every major corporate tax development, including the OBBBA's permanent §174A domestic R&E expensing rules, NCTI (formerly GILTI), and bonus depreciation. This section covers the full ASC 740 framework from deferred tax mechanics to KPMG audit support.

OBBBA Impact on Tax Provisions (2025+)

The One Big Beautiful Bill Act (OBBBA P.L. 119-21) permanently changed several provisions that directly affect the tax provision: §174A domestic R&E expensing rules, NCTI (formerly GILTI) with a 40% §250 deduction, bonus depreciation restored to 100%, and §163(j) EBITDA-based ATI. Each of these creates new permanent vs. temporary difference questions for ASC 740 purposes. Under ASC 740-10-25-47, the effects are recognized in the period that includes the July 4, 2025 enactment date (the third quarter 2025 interim period for calendar-year companies), so affected deferred tax assets and liabilities are remeasured at enactment.

ASC 740 Foundations
Guide
ASC 740 Overview
Current vs. deferred tax, temporary vs. permanent differences, effective tax rate reconciliation, and the basic provision structure.
Guide
Tax Provision Deep Dive
Multi-jurisdiction provision mechanics, rate reconciliation, return-to-provision true-up, and workpaper structure for external audit.
Guide
Transfer Pricing Documentation
Arm's length standard, contemporaneous documentation, penalty protection, and intercompany transaction types.
Deferred Tax Assets & Liabilities
Guide
Bonus Depreciation & ASC 740
100% bonus depreciation (OBBBA permanent) creates accelerated depreciation temporary differences. Deferred tax liability mechanics and scheduling.
Guide
§163(j) Business Interest & ASC 740
Disallowed business interest generates a DTA. Valuation allowance analysis for entities where future deductibility is uncertain. OBBBA EBITDA restoration impact.
Guide
NOL Carryforwards & ASC 740
Indefinite NOL carryforwards create DTAs. 80% limitation interacts with valuation allowance scheduling. Positive and negative evidence framework.
Guide
OBBBA Provision Impact
Comprehensive OBBBA changes that require remeasurement of deferred tax balances: §174A, NCTI 40% deduction, 100% bonus depreciation, EBITDA-based §163(j).
International Tax in the Provision
Guide
NCTI / GILTI in the Provision
Period cost vs. deferred approach, practical expedient election, 40% §250 deduction (OBBBA), and NCTI as a permanent vs. temporary difference under ASC 740.
Guide
Foreign Tax Credits & ASC 740
FTC carryforwards as DTAs, basket limitations in the provision, and the interaction between the §960 deemed paid credit and the tax provision.
Guide
Transfer Pricing & UTPs
Intercompany pricing creates uncertain tax positions. Documentation requirements, penalty protection thresholds, and ASC 740-10 recognition.
Uncertain Tax Positions (UTPs)
Guide
IRS Audit & UTP Lifecycle
From assessment to resolution: how audit risk informs UTP recognition and measurement under the more-likely-than-not threshold of ASC 740-10.
Stock-Based Compensation & ASC 740
Guide
SBC & ASC 740 (ASU 2016-09)
Excess tax benefits recognized in the income statement (not APIC) since ASU 2016-09. ISO vs. NQO treatment, shortfalls, and the windfall/shortfall DTA.
Coming Soon

Additional ASC 740 guides in development: Valuation Allowance Analysis (positive/negative evidence, cumulative loss presumption), Interim Period Tax Accounting (AETR method), State Tax Provision (blended rates, apportionment), and the full OBBBA provision impact workpaper guide.

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