Major challenges of the new lease accounting standards

Lease Accounting Tax Impacts

Under the new leasing standard, leases will not be treated differently for U.S. federal income tax purposes. However, the increase in assets and liabilities could impact a variety of financial measurements which may in turn change the amount of taxes paid.

Key Considerations

1. Deferred taxes

How will deferred taxes change? Consider how bringing operating leases onto the balance sheet could change the asset value under GAAP but not under the US tax code, resulting in a need for deferred taxes.

2. State taxes

How will state taxes change under the new accounting rules? Consider whether a state collects property or franchise taxes which could change under the new standard.

3. Corporate processes

Will corporations change their processes due to the new standards? How will lease data be tracked to ensure accuracy for tax purposes? Also consider how changing processes may impact international taxes.

The ASC 842 Handbook

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RESOURCES

What the experts think.

How will the new lease accounting standards impact loan covenants?

Tax implications of ASC 842: Lease accounting standards

March 19, 2019 – In this recorded webcast, RSM covers how organizations can best handle the possible tax implications of ASC 842 and how technology can help make for an easier transition.

Read more »

Tax Accounting Perspectives: New accounting update requires changes to accounting for leases

February 14, 2018 – Deloitte’s Tax Accounting Perspectives document on the tax impacts of the new lease accounting standard, ASC 842, covers the potential impacts of the new standard on deferred taxes, state as well as local taxes, and the transition rules.

Read more »

Taxes and the New Leasing Standard (ASC 842)

March 19, 2019 – In this recorded webcast, RSM covers how organizations can best handle the possible tax implications of ASC 842 and how technology can help make for an easier transition.

Read more »

6 tax issues CFOs should understand about FASB’s new lease accounting standard

Deloitte’s Tax Accounting Perspectives document on the tax impacts of the new lease accounting standard, ASC 842, covers the potential impacts of the new standard on deferred taxes, state as well as local taxes, and the transition rules.

Read more »

Tax considerations associated with the new leasing standard

November 15, 2016 – PwC reviews how the new guidance will impact the U.S. GAAP financial statement accounting for leases by lessees, eliminating the traditional concept of an operating lease.

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Evaluate the tax considerations of the new lease accounting standard

March 16, 2016 – On February 25, 2016, FASB issued its new lease accounting standard, Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). This new standard will affect all companies that lease, or sublease, assets in the nature of property, plant or equipment.

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