Reporting of book-tax differences for financial and tax purposes: A case study

Recent events in financial and tax accounting have brought the issue of financial accounting for tax expenses to the forefront of both the accounting profession and academia. Complexities abound on both sides, from ASC 740/FAS 109 and ASC 740-10/FIN 48 issues on the financial accounting side to the Schedule M-3 and Schedule UTP reporting requirements on the tax side. This complexity has created a vacuum in accounting curricula, as bits and pieces of the total puzzle are covered in the intermediate accounting and tax courses, without a comprehensive, integrated review in one place.This paper bridges the gap between financial accounting and tax courses by providing a comprehensive review of the computational, disclosure and reporting requirements both from a financial accounting and tax perspective. The result is an integrated lecture/study tool for students. A comprehensive case with a multinational firm, where the reporting and computational requirements are more complex, is used to demonstrate implementation of these requirements. Materials are presented in a format that enables instructors to vary the depth into which these book and tax rules are examined.

► Case involving book-tax differences for a complex consolidated tax return.
► Provides guidance for preparing the Schedule M-3 for a multinational taxpayer.
► Includes tutorial covering book and tax reporting requirements for income taxes.
► Supplementary Material provided on GAAP valuation allowance and Schedule UTP.