The SEC published new guidance to facilitate public disclosure of the accounting impacts of the recently passed Tax Cuts and Jobs Act. According to the SEC, the new tax legislation could have a "significant impact on an entity's domestic and international tax consequences."
In Staff Accounting Bulletin No. 118 (the "SAB"), the SEC provided an interpretation of Accounting Standards Codification Topic 740 (Income Taxes) to assist in the application of U.S. GAAP when preparing an initial accounting of the income tax effects of the Act. The SEC noted that certain circumstances may arise from the Tax Cuts and Jobs Act that are not covered by ASC Topic 740. The guidance provides a "measurement period" in which an entity can report income tax effects on a provisional basis, to be adjusted after the entity evaluates the impact of the bill on its financial statements. The guidance includes expectations for making disclosures to investors throughout the measurement period.
The SEC also published Compliance and Disclosure Interpretations guidance on Form 8-K reporting obligations for issuers as they make use of the "measurement period."
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