Wednesday, February 8, 2012
The House Ways & Means Committee holds a hearing today on The Interaction of Tax and Financial Accounting on Tax Reform:
The hearing will consider how public companies evaluate tax policy options in light of financial accounting considerations. It will examine whether tax legislation works as intended when Congress fails to account for the effects of financial accounting on corporate behavior.
- Michael D. Fryt (Corporate Vice President, Tax, FedEx)
- Michelle Hanlon (Professor, MIT Sloan School of Management)
- Timothy S. Heenan (Vice President, Treasury & Tax, Praxair)
- Tom S. Neubig (National Director, Quantitative Economics and Statistics, Ernst & Young )
- Mark A. Schichtel (Senior Vice President & Chief Tax Officer, Time Warner Cable)
In connection with the hearing, the Joint Committee on Taxation has released Present Law and Background Relating to the Interaction of Federal Income Tax Rules and Financial Accounting Rules (JCX-13-12):
This document ... provides an overview of earnings per share computations and the financial accounting rules for deferred taxes and uncertain tax positions. The document also provides examples of financial accounting for income taxes. The examples include: comparisons of accelerated depreciation, expensing, or tax credits to encourage capital investment; permanent differences between financial statement income and taxable income; income tax rate reductions as compared to special deductions to arrive at measured taxable income; and earnings of foreign subsidiaries where there is an assertion made that the earnings are permanently reinvested as compared to when there is not such an assertion made. The document concludes with a discussion of incentives related to the financial accounting for income taxes.