Statements of Position



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The Board's conclusions concerning some of the problems in accounting for income taxes are summarized as follows: a. Interperiod tax allocation is an integral part of the determination of income tax expense, and income tax expense should include the tax effects of all revenue and expense items included in the determination of pretax accounting income. b. Interperiod tax allocation procedures should follow the deferred method, both in the manner in which tax effects are initially recognized and in the manner in which deferred taxes are amortized in future periods. c. The tax effects of operating loss carrybacks should be allocated to the loss periods. The tax effects of operating loss carry forwards usually should not be recognized until the periods of realization. d. Allowable investment credits usually should be applied in the determination of income tax expense in those periods in which the costs of the related property giving rise to the investment credits enter into the determination of pretax accounting income through provisions for depreciation or amortization. e. Tax allocation within a period should be applied in order to obtain fair presentation of the various components of results of operations. f. Financial statement presentations of income tax expense and related deferred taxes should indicate clearly (1) the composition of income tax expense as between amounts currently payable and amounts representing tax effects allocable to the period, and (2) the classification of deferred charges and deferred credits into a net current amount and a net noncurrent amount.

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Income tax -- United States -- Accounting; Tax accounting -- United States


Accounting | Taxation


Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.

Proposed APB opinion : Accounting for income taxes;Accounting for income taxes; Exposure draft (American Institute of Certified Public Accountants), 1967, Sept. 14



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