A pass-through entity, which would not normally be subject to tax, may elect to pay income taxes under a pass-through entity tax regime. In these situations, ASC 740 provides guidance on whether the income taxes are attributed to the pass-through entity or its owners. The determination is based on the laws and regulations of each specific jurisdiction. If an income tax is attributable to the entity, the entity should account for the tax in accordance with ASC 740, including the recognition of deferred taxes if applicable. Conversely, if an income tax is attributable to the owners, the pass-through entity would account for the income taxes paid by applying other guidance. The examples in ASC 740-10-55-226 through 55-228 provide a high-level framework for making this assessment:
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