On March 25, 2019, the Financial Accounting Standards Board (FASB) issued proposed updates to the income tax disclosure rules under ASC 740 in order to improve the effectiveness and relevance of disclosures for users of financial statements. The Proposed Accounting Standards Update – Income Taxes (Topic 740): Disclosure Framework – Changes to the Disclosure Requirements for Income Taxes (the proposed ASU) is applicable to all companies that are subject to income taxes. However, certain disclosure requirements within the proposed ASU are only required for public business entities.
FASB’s revised disclosure requirements would place a significant focus on the disaggregation of tax-relevant amounts such as pre-tax income, income taxes paid, income tax expense, deferred tax carryforwards between federal, state and foreign. Additionally, the proposed amendments would require more detailed disclosures for the effective tax rate reconciliation and unrecognized tax benefits. Insurance companies need to contemplate the impact of these proposed changes on their statutory statements.
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