In certain jurisdictions and for certain entities, an entity may be subject to certain taxes in lieu of an income tax, such as an excise or other type of tax. For example, not-for-profit foundations that make certain minimum distributions are generally exempt from U.S. federal income taxes but may be subject to an excise tax on their net investment income. Such an excise tax meets the definition of a tax based on income and therefore is within the scope of ASC 740. Alternatively, in some jurisdictions, qualifying entities may be subject to an excise tax (e.g., based on a percentage of assets or sales) in lieu of an income tax. Although this tax is levied in lieu of an income tax, it is not based on a measure of income and therefore is not within the scope of ASC 740. Entities should carefully consider how each type of tax is assessed to determine whether the tax should be included within the scope of ASC 740.
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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.