6.1 Background

ASC 740 requires an entity to allocate its total annual income tax provision among continuing operations and the other components of its financial statements (e.g., discontinued operations, OCI, and shareholders’ equity). Although it may appear simple, ASC 740’s model for achieving intraperiod tax allocation, which is often referred to as the “with-and-without” approach, is one of the more challenging aspects of income tax accounting.