A number of provisions in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), coupled with those in the Consolidated Appropriations Act, 2021 (CAA), could have significant income tax accounting implications for businesses, including changes to how deferred tax assets and liabilities are measured, how deferred tax assets are realized, and how an entity incorporates these changes into its interim tax accounting.
New Developments Summary 2020-07, “COVID-19, the CARES Act, and CAA: income tax reporting and accounting considerations,” as updated, focuses on accounting and reporting implications under two major U.S. federal stimulus packages, including a summary of their provisions as well as many income tax accounting and financial reporting considerations triggered by both acts. Companies are required to record the tax effects of the CARES Act in the interim and annual periods that include March 27, 2020, which is the date when the CARES Act was enacted, and Dec. 27, 2020, which is the date when the CAA was signed into law.
Given the rapidly evolving nature of the global economic impact of COVID-19, entities should maintain close communication with their board of directors, legal advisers, external auditors, and other service providers. Stay informed at Grant Thornton’s COVID-19 Resource Center.
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