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Income tax accounting under COVID-19 and CARES Act

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Women filing tax using calculator There is a lot of information to absorb from COVID-19 implications and significant stimulus packages across the globe as companies focus on closing the first quarter of 2020. A number of provisions in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) could have significant income tax accounting implications for entities, 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.

As the first quarter of 2020 comes to a close, this New Developments Summary focuses on top-of-mind accounting and reporting implications of COVID-19 and the recent U.S. federal stimulus package, including a summary of the provisions of the CARES Act and many income tax accounting and financial reporting considerations triggered by the act and COVID-19. 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 new law was enacted.

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.

Download our publication here.