14.5 Public Entities Not Subject to Income Taxes

ASC 740-10

Public Entities Not Subject to Income Taxes

50-16 A public entity that is not subject to income taxes because its income is taxed directly to its owners shall disclose that fact and the net difference between the tax bases and the reported amounts of the entity’s assets and liabilities.

Pending Content (Transition Guidance: ASC 740-10-65-9)

Public Business Entities Not Subject to Income Taxes

50-16 A public business entity that is not subject to income taxes because its income is taxed directly to its owners shall disclose that fact and the net difference between the tax bases and the reported amounts of the entity’s assets and liabilities.

14.5.1 Tax Bases in Assets

The disclosure requirement described in ASC 740-10-50-16 above applies to any public entity for which income is taxed directly to its owners, including regulated investment companies (mutual funds), public partnerships, and Subchapter S corporations with public debt.

The reference to “tax bases” in ASC 740-10-50-16 is meant to include the partnership’s or other entity’s tax basis in its (net) assets. The FASB’s rationale for this information is based on the belief that financial statement users would benefit from knowing the approximate tax consequence in the event the flow-through entity changes its tax status and becomes a taxable entity in the future.

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This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.