Chapter 7 — Common Issues Related to Cash Flows

7.6 Leases

ASU 2016-02 (codified in ASC 842), which revised the leasing guidance in U.S. GAAP, became effective for calendar-year-end public business entities on January 1, 2019. In response to the global COVID-19 pandemic, the FASB issued ASU 2020-05 in June 2020 to (1) delay the effective date of ASC 606 for certain nonpublic entities by one year and (2) defer the effective date of ASC 842 to fiscal years beginning after December 15, 2021, for certain public business entities (e.g., NFPs) and all nonpublic entities.

An entity adopts ASC 842 by using a modified retrospective approach. Under this approach, the standard is effectively implemented either (1) as of the earliest period presented and through the comparative periods in the entity’s financial statements or (2) as of the effective date of ASC 842, with a cumulative-effect adjustment to equity. Upon transition to ASC 842, lessees will bring most leases onto the balance sheet and will disclose them as noncash investing and financing activities. For a more detailed understanding of the requirements of ASC 842, see Deloitte’s Roadmap Leases.

7.6.1 Initial and Subsequent Recognition of Leases

Before the Adoption of ASC 842

7.6.1.1 Capital Leases

In accordance with ASC 840, for a capital lease, a lessee recognizes a lease asset and lease liability at lease commencement. Accordingly, the lessee would account for the capital lease transaction in its statement of cash flows at lease commencement as a noncash investing and financing transaction, as discussed in ASC 230-10-50-4, which states:

Examples of noncash investing and financing transactions are converting debt to equity; acquiring assets by assuming directly related liabilities, such as purchasing a building by incurring a mortgage to the seller; obtaining an asset by entering into a capital lease; obtaining a building or investment asset by receiving a gift; and exchanging noncash assets or liabilities for other noncash assets or liabilities. [Emphasis added]

In other words, the statement of cash flows would not be affected by the noncash nature of a situation in which an entity enters into a capital lease. Instead, the entity would only provide noncash investing and financing disclosures (see Chapter 5 for more information). Subsequently, when the lessee makes principal payments under a capital lease, the lessee should reflect the principal payment as a cash outflow from a financing activity in the statement of cash flows. The portion of the capital lease payment that reflects the interest payment should be classified as a cash outflow from an operating activity in the statement of cash flows.

7.6.1.2 Operating Leases

Under ASC 840, there is no balance sheet recognition at lease commencement for operating leases. Consequently, there is no accounting for the lessee’s operating lease transaction at lease commencement in the lessee’s statement of cash flows. Subsequently, lease payments are presented as cash outflows from operating activities in the lessee’s statement of cash flows in a manner consistent with how the lease expense is recognized in the lessee’s income statement.

After the Adoption of ASC 842

7.6.1.3 Lessee Presentation

In accordance with ASC 842, upon entering into operating and finance leases, a lessee records on its balance sheet a right-of-use (ROU) asset and lease liability as of lease commencement. Accordingly, upon initial recognition of an ROU asset and lease liability at lease commencement, the lessee would disclose the recognition of the ROU asset and lease liability as a noncash activity. Such presentation is consistent with ASC 230-10-50-4, which was amended in ASC 842 to remove the reference to capital leases and therefore make the guidance applicable to all leases. ASC 230-10-50-4, as amended, states:

Examples of noncash investing and financing transactions are converting debt to equity; acquiring assets by assuming directly related liabilities, such as purchasing a building by incurring a mortgage to the seller; obtaining a right-of-use asset in exchange for a lease liability; obtaining a beneficial interest as consideration for transferring financial assets (excluding cash), including the transferor’s trade receivables, in a securitization transaction; obtaining a building or investment asset by receiving a gift; and exchanging noncash assets or liabilities for other noncash assets or liabilities. [Emphasis added]

ASC 842-20

45-5 In the statement of cash flows, a lessee shall classify all of the following:

Repayments of the principal portion of the lease liability arising from finance leases within financing activities
Interest on the lease liability arising from finance leases in accordance with the requirements relating to interest paid in Topic 230 on cash flows
Payments arising from operating leases within operating activities, except to the extent that those payments represent costs to bring another asset to the condition and location necessary for its intended use, which should be classified within investing activities
Variable lease payments and short-term lease payments not included in the lease liability within operating activities.

In accordance with ASC 842-20-45-5(a) and (b), for lease payments made to repay a finance lease liability, the lessee should present, in its statement of cash flows, (1) the principal portion of the payments as cash outflows from financing activities and (2) the interest portion of the payments as cash outflows from operating activities. Presentation of cash outflows in the statement of cash flows for finance leases in accordance with ASC 842 is (1) comparable to how principal and interest payments are presented for other financial liabilities6 and (2) consistent with how cash outflows for capital leases under ASC 840 are presented.

For operating leases under ASC 842, subsequent repayments of lease liabilities should be classified in operating activities in accordance with ASC 842-20-45-5(c) and (d). Further, a lessee should present, as cash outflows for operating activities, lease payments made that were not included in the lease liability on the lessee’s balance sheet. For example, lease payments not included in the lessee’s lease liability include (1) variable lease payments and (2) lease payments for leases in which the related lease terms are one year or less (i.e., short-term leases) and for which the lessee elects as a policy to treat such leases as executory contracts in a manner similar to operating leases under ASC 840. However, ASC 842-20-45-5(c) notes that there is an exception to presentation as operating activities when payments are made for costs of bringing another asset to the condition and location necessary for its intended use, in which case those payments should be classified as investing outflows.

Paragraph BC271 of ASU 2016-02 explains the Board’s rationale behind its decision that cash flows from operating leases and variable lease payments that are not included in the lease liability should be classified as operating activities:

In addition, the Board decided that cash flows from operating leases and variable lease payments that are not included in the lease liability should be classified as operating activities because the corresponding lease costs, if recognized in the statement of comprehensive income, will be presented in income from continuing operations. The previous sentence notwithstanding, Topic 842 states that lease payments capitalized as part of the cost of another asset (for example, inventory or a piece of property, plant, or equipment) should be classified in the same manner as other payments for that asset.

The example below illustrates the financial statement presentation for a finance lease and operating lease.

Example 7-12

A lessee enters into a three-year lease and agrees to make the following annual payments at the end of each year: $10,000 in year 1, $15,000 in year 2, and $20,000 in year 3. The initial measurement of the ROU asset and liability to make lease payments is $38,000 at a discount rate of 8 percent.

This table highlights the differences in accounting for the lease as a finance lease and an operating lease:

For the finance lease model, the interest expense calculated is a function of the lease liability balance and the discount rate (i.e., $38,000 multiplied by 8 percent in year 1). For the finance lease, the lessee includes amortization expense as a noncash add-back to the operating activities section of the statement of cash flows, which is calculated on a straight-line basis ($38,000 divided by 3). The principal portion of the cash payment is reflected in the financing section as principal paid. There is no need to separately add interest expense since it is already included in net income in the operating section. The supplemental section includes interest paid.

For the operating lease model, the lessee may include noncash lease expense as a noncash add-back to the operating section of the statement of cash flows ($15,000 – $3,038 = $11,962); this reflects the portion of the lease expense that amortized the ROU asset. While this presentation reflects a best practice, there may be other acceptable methods of presentation for the change in ROU assets; however, it would be inappropriate to present the change in ROU assets in amortization expense. Entities contemplating a different method of presentation are encouraged to discuss the method with their accounting advisers. The cash payment is reflected in the operating section as a change in operating liabilities. Because interest expense is not included in operating leases, there are no separate disclosures for this activity.

In addition, ASC 842-20-50-1 states that the “objective of the disclosure requirements is to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.” As a result, entities are required to provide various other cash and noncash disclosures for lease transactions under ASC 842 to supplement the amounts recorded in the financial statements (in addition to the disclosures they are required to provide under ASC 230). Such disclosures include the following:

ASC 842-20

50-4 For each period presented in the financial statements, a lessee shall disclose the following amounts relating to a lessee’s total lease cost, which includes both amounts recognized in profit or loss during the period and any amounts capitalized as part of the cost of another asset in accordance with other Topics, and the cash flows arising from lease transactions: . . .

g. Amounts segregated between those for finance and operating leases for the following items:

1. Cash paid for amounts included in the measurement of lease liabilities, segregated between operating and financing cash flows

2. Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets. . . .

While ASC 230 does not explicitly require entities to provide these disclosures in the statement of cash flows, entities should ensure that they comply with the requirements in ASC 842-20-50 related to any incremental cash and noncash disclosures that must be included in the footnotes to the financial statements.

7.6.1.4 Lessor Presentation

ASC 842-30

Sales-Type and Direct Financing Leases

45-5 In the statement of cash flows, a lessor shall classify cash receipts from leases within operating activities. However, if the lessor is within the scope of Topic 942 on financial services — depository and lending, it shall follow the guidance in paragraph 942-230-45-4 for the presentation of principal payments received from leases.

Operating Leases

45-7 In the statement of cash flows, a lessor shall classify cash receipts from leases within operating activities.

With the exception of depository and lending lessors within the scope of ASC 942,7 a lessor’s classification of cash receipts from leases should be classified as cash inflows from operating activities (regardless of whether the lease is classified as a sales-type, direct financing, or operating lease) because, as noted in paragraph BC335 of ASU 2016-02, “[t]he Board decided that in the statement of cash flows, a lessor should classify lease payments received on all leases within operating activities because leasing is generally part of a lessor’s revenue-generating activities.”

7.6.2 Lease Incentives

A lessor may make payments to incentivize a lessee to enter into a lease agreement. For example, a lessor may provide a lessee with a tenant improvement allowance to fund the lessee’s expenditures related to improving the leased space primarily for the lessee’s benefit. The next sections discuss how a lessee would classify payments received for such cash incentives paid by a lessor.

Before the Adoption of ASC 842

When a lessee makes payments for leasehold improvements in an operating lease, the cash outflow should be presented as an investing activity in the statement of cash flows. When leasehold improvements made by a lessee are reimbursed by a landlord (i.e., the lessor pays the lessee an incentive, which in this case is related to the lessee’s leasehold improvements), the lessee should separately present the cash inflow from the lessor as an operating activity in the lessee’s statement of cash flows. The SEC staff supports this view, as discussed in its February 7, 2005, letter to the Center for Public Company Audit Firms, which states, in part:

Landlord/Tenant Incentives — The staff believes that: (a) leasehold improvements made by a lessee that are funded by landlord incentives or allowances under an operating lease should be recorded by the lessee as leasehold improvement assets and amortized over a term consistent with the guidance in item 1 above; (b) the incentives should be recorded as deferred rent and amortized as reductions to lease expense over the lease term in accordance with paragraph 15 of SFAS 13 and the response to Question 2 of FASB Technical Bulletin 88-1 (“FTB 88-1”), Issues Relating to Accounting for Leases, and therefore, the staff believes it is inappropriate to net the deferred rent against the leasehold improvements; and (c) a registrant’s statement of cash flows should reflect cash received from the lessor that is accounted for as a lease incentive within operating activities and the acquisition of leasehold improvements for cash within investing activities. The staff recognizes that evaluating when improvements should be recorded as assets of the lessor or assets of the lessee may require significant judgment and factors in making that evaluation are not the subject of this letter. [Emphasis added]

After the Adoption of ASC 842

ASC 842 indicates that lease incentives paid or payable to the lessee at commencement should be accounted for as a reduction to the fixed payments in the initial measurement of the ROU asset. As a result, the receipt of a landlord incentive affects the initial recognition of the ROU asset and lease liability, which is disclosed as a noncash activity, as noted in Section 7.6.1.3. However, we believe that, because the receipt of the landlord incentive effectively reduces the lease payments made in future periods, the receipt of the cash incentive should be classified in a manner consistent with the related lease payment. In other words, a cash incentive received from a landlord in connection with an operating lease should be classified in the lessee’s statement of cash flows as an inflow from operating activities in a manner consistent with the cash flow presentation of an operating lease payment; on the other hand, an incentive received in connection with a finance lease should be classified as an inflow from financing activities.

7.6.3 Sale-Leaseback Transactions

Under both ASC 840 and ASC 842, the presentation of cash inflows resulting from a sale-leaseback transaction depends on whether the seller-lessee achieves sale accounting. If the transaction satisfies the conditions for sale accounting, the cash inflows resulting from the transaction are presented as an investing activity in the statement of cash flows in a manner consistent with the underlying balance sheet classification. If the transaction does not satisfy the conditions for sale accounting, the cash inflows resulting from the transaction should be classified as a financing activity in the statement of cash flows.

In addition, Example 1 in ASC 842-40-55-23 through 55-30 illustrates the accounting by both parties in a sale-leaseback transaction when sale accounting is achieved and the sale is not at fair value (i.e., includes “off-market terms”). ASC 842-40-55-24 indicates that the “amount of the excess sale price [which is significantly in excess of fair value] . . . is recognized as additional financing from Buyer to Seller.” Therefore, the cash flow for the additional financing should be classified as a financing activity in the statement of cash flows.

7.6.3.1 Sale or Transfer of a Purchase Option by a Lessee

Some leases give an entity that leases an asset the right to purchase the underlying leased asset during or after the lease. In some instances, instead of exercising this right, the entity may enter into a transaction in which (1) the entity transfers the option to purchase the asset to an unaffiliated third party for no consideration and (2) the third party is required to exercise the option and lease back the asset to the entity.

An option that grants to the potential seller-lessee the right to purchase the underlying asset may convey control of the asset before exercise. Although certain risks and rewards of the asset may be transferred to an entity when the option is first conveyed to the entity (e.g., a fixed-price purchase option that conveys the right to participate in any future appreciation in the asset’s value), we believe that the entity typically does not control the underlying asset at that point. Rather, we think that the entity controls the underlying asset at the point when it effectively exercises the option by transferring it to an unaffiliated third party (a buyer-lessor) and requiring that the third party exercise it. At that point, the entity controls the underlying asset and what happens to it by requiring someone else to exercise the option (the owner of the asset is compelled to transfer the asset in accordance with the option) and requiring the buyer to provide the entity with the right to use the asset. Therefore, such a transaction would be subject to the sale-leaseback accounting guidance in ASC 842-40.

If an entity transfers the purchase option for no consideration and concludes that the transfer is a failed sale-leaseback transaction, the entity must account for the transfer as a financing arrangement in accordance with ASC 842-40. In a manner consistent with the guidance in Section 7.6.3, the entity must present cash flows resulting from a financing arrangement as financing activities in the statement of cash flows. However, if a transfer of a purchase option to a third party does not result in cash flows for the entity, the guidance is less clear.

We do not believe that there are differences between the economics of (1) transactions in which the entity transfers the option to purchase the asset to an unaffiliated third party for no consideration and the third party is required to exercise the option and lease back the asset to the entity and (2) transactions in which the entity had exercised its option to purchase the underlying asset itself. In the first instance, the third party is acting as the entity’s agent and transfers cash to the original lessor on the entity’s behalf. In the second, the entity would exercise its option to purchase the asset and would pay cash directly to the lessor. We believe that in both scenarios, the cash flow presentation should be the same. That is, although the third party disbursed cash to the lessor, the substance of the transaction is that the entity exercised its option to purchase the asset and disbursed cash to the lessor and then transferred the asset to the third party for cash. Accordingly, the entity should present the transactions in its statement of cash flows in a manner consistent with the constructive receipt and disbursement guidance in Section 7.2.

For a financing arrangement, the entity presents the constructive receipt of cash that is recognized as a financial liability as a financing activity in the statement of cash flows. The constructive disbursement to purchase the underlying asset from the original lessor by exercising the purchase option is presented in the statement of cash flows in accordance with the guidance discussed in Section 7.6.6 on purchasing the underlying asset to terminate the lease.

Given the absence of a direct exchange of cash for the entity, some believe that it is acceptable to present the transfer of the purchase option to the third party and the exercise of that option by the third party as noncash transactions. Entities that determine that such presentation is appropriate are encouraged to consult with their accounting advisers.

7.6.4 Termination Costs Received From the Lessor

In certain instances, a lessor might want to exit an operating lease before the end of the lease term. Motivating factors for an early lease termination may include an alternative use for the asset that is more economically beneficial, a more profitable lease agreement with a different lessee, or an intent to sell the leased asset. To facilitate an early lease termination, a lessor often will need to compensate a lessee to exit a lease early.

Under both ASC 840 and ASC 842, we view cash received from a lessor to early terminate a lease as similar to a cash incentive, which lessees generally receive from lessors at the onset of lease arrangements. Therefore, we believe that the timing of when a lessee receives cash from the lessor should not affect how the cash receipt is presented in the lessee’s statement of cash flows. As a result, as with the presentation of lease incentives (as discussed further in Section 7.6.2), the receipt of a termination payment should be presented in a manner consistent with the related lease payment. In other words, an early termination payment received from a landlord in connection with either an operating or a finance lease should be classified in the lessee’s statement of cash flows as an inflow from operating or financing activities, respectively.

7.6.5 Payments for Land-Use Rights

In some countries, such as China, most, if not all, land is government-owned, and government-imposed restrictions are placed on the transfer of legal title to real property. Rather than permitting titles of real property to be transferred, governments in such countries may grant land-use rights under which entities can use the property for a specified period (i.e., 50 years), with renewal options for similar terms. Such entities typically would be required to make an up-front payment in full for the right to use the land for the stated term and generally would not have the right to purchase the land at the end of the term.

There is no specific guidance addressing the classification of land-use rights, including up-front payments for such rights, in the statement of cash flows.

Before the Adoption of ASC 842

Under ASC 840, there are currently two acceptable alternatives that entities have applied in practice when classifying payments for land-use rights. The first of these alternatives is to classify the payments as cash outflows in operating activities because the arrangement either is or is akin to an operating lease in accordance with ASC 840-10. This view is based on the facts that real property is the sole item being leased, title to the land is not transferred to the entity, and the entity does not have an option to purchase the property. Entities that classify payments for land-use rights within operating activities believe that the payments, in substance, represent prepaid rent related to an operating lease.

The second of these alternatives is to classify the payments as cash outflows for investing activities on the basis of the notion that the purpose of purchasing land-use rights is to obtain the right to construct buildings or other real property on that land, and payments to construct real property are classified as investing activities in accordance with ASC 230-10-45-13. Entities that classify payments for land-use rights within investing activities view both the land-use rights payment and payments to construct the real property on the land as part of their overall capital expenditure initiatives. Entities that enter into agreements with more extensive terms also believe that, although title to the underlying land is never transferred, the terms are economically similar to those in which the title to the land is acquired, in part because of the significant period of time afforded by the land-use right.

After the Adoption of ASC 842

The classification of payments for land-use rights depends on whether the agreement is or contains a lease in accordance with ASC 842. We believe that if the agreement meets the definition of a lease, the associated payments should be classified in a manner consistent with the guidance on classification of other lease payments (see Section 7.6.1).

If the agreement does not meet the definition of a lease, entities should consider other applicable GAAP in determining the appropriate cash flow presentation. In such cases, classification should be determined on the basis of the nature of the underlying cash flow in accordance with the principles in ASC 230. For example, if an entity were to conclude that the payment is capitalizable and meets the definition of an intangible asset under ASC 350, classification as an investing outflow may be appropriate.

Connecting the Dots

Because (1) ownership of the land is not generally transferred in these arrangements (rather, a right of use is granted for a period) and (2) land is an asset that is within the scope of ASC 840 and ASC 842, some believe that entities should evaluate land-use rights to determine whether they are leases. While views differed on whether, under ASC 840, a land-use right is akin to an operating lease or a right to construct buildings or other real property on that land, we believe that, under ASC 842, the parties to a land-use arrangement should assess whether the contract is or contains a lease before considering other applicable GAAP.

7.6.6 Payments to Purchase the Underlying Asset Subject to a Lease

A lessee may decide to purchase the underlying asset from the lessor and terminate the lease by exercising a purchase option granted to the lessee at lease commencement or by separately negotiating the purchase of the leased asset with the lessor. The presentation of the cash flows resulting from the purchase of the underlying asset depends on whether the lease is classified as a finance lease or an operating lease.

7.6.6.1 Operating Lease

An operating lease does not transfer control of the entire underlying asset to the lessee. Rather, the operating lease transfers control of the right to use the underlying asset to the lessee for a particular period in exchange for a lease liability. However, the right to use an asset represents only one right associated with the entirety of the asset.

In situations in which control of the entire underlying asset has not been transferred in an operating lease and the lessee purchases the underlying asset before the end of the lease term, questions have arisen regarding how an entity should classify its payment for such purchase in the statement of cash flows. We believe that it is acceptable for the entity to use one of the following approaches to classify the cash outflow to purchase the underlying asset subject to an operating lease:

Approach A: Extinguishment of the lease liability — The payment to purchase the underlying asset extinguishes the lease liability in a manner similar to the purchase of an asset subject to a finance lease and is classified consistently with other lease payments in an operating lease. Payments to settle the lease liability should be classified as operating activities under ASC 842-20-45-5(c). Because the cash outflow extinguishes the lease liability, the underlying asset is considered purchased through a noncash exchange of the ROU asset for the underlying leased asset. Any amount paid in excess of the lease liability recognized on the balance sheet as of the purchase date is classified as an investing activity to reflect the purchase of PP&E or other productive assets.
Approach B: Purchase of the underlying asset — The cash outflow is considered payment to acquire the underlying asset, and the subsequent termination of the lease results in derecognition of the ROU asset and lease liability in a noncash transaction. If the lease liability exceeds the carrying amount of the ROU asset on the purchase date, the portion of the payment that extinguishes the remaining liability is classified as operating activities consistently with other lease payments for an operating lease. Any residual payment in excess of the extinguishment of the remaining lease liability is classified as investing activities to reflect the purchase of PP&E or other productive assets.

The example below illustrates the statement of cash flows presentation under the two approaches for an operating lease.

Example 7-13

A lessee enters into a five-year operating lease of specified machinery (an equipment asset). The initial measurements of the ROU asset and lease liability are $63,578 and $65,328, respectively.

At the end of year 4, the lessee reaches an agreement with the lessor to purchase the machinery for $17,000. At the time of purchase, the ROU asset and lease liability balances are $15,419 and $15,547, respectively.

For the purchase of the asset and termination of the operating lease, the lessee classifies the payment of $17,000 in its year 4 statement of cash flows as follows:

7.6.6.2 Finance Lease

Paragraph BC352(b) of ASU 2016-02 states that when a lessor leases an underlying asset to a lessee under a finance lease, “the lessee, in effect, obtains the ability to direct the use of, and obtain substantially all the remaining benefits from, the underlying asset.” That is, the lessee obtains control of the entire underlying asset. Accordingly, a finance lease is economically equivalent to a financed purchase of the underlying asset.

If the lessee purchases the underlying asset in a finance lease before the end of the lease term, the cash outflow to terminate the lease represents the extinguishment of the financial liability associated with the financed purchase of the asset. As a result, the payment to purchase the underlying asset extinguishes the lease liability and is classified consistently with other lease payments in a finance lease. Under ASC 842-20-45-5(a), payments to settle the lease liability should be classified as financing activities. Because the cash outflow extinguishes the lease liability, the underlying asset is considered purchased through a noncash exchange of the ROU asset for the underlying leased asset. Any amount paid in excess of the lease liability recognized on the balance sheet as of the purchase date is classified as an investing activity to reflect the purchase of PP&E or other productive assets.

While we believe that it is acceptable for entities to apply the approach described above regarding the presentation of cash flows when a lessee purchases an underlying asset in a finance lease, we understand that some entities may wish to classify such cash flows in a manner consistent with Approach B for operating leases discussed in Section 7.6.6.1. Entities that plan to classify cash flows by using Approach B discussed in Section 7.6.6.1 are encouraged to consult with their accounting and financial advisers.

The example below illustrates the statement of cash flows presentation for a lessee’s purchase of an underlying asset subject to a finance lease. However, we have observed that depending on the nature of activities associated with the purchase and sale of crypto assets, entities have classified the cash flows from such purchases and sales as operating activities. Entities that plan to classify cash flow activity from this type of arrangement within operating activities are encouraged to consult with their accounting and financial advisers.

Example 7-14

A lessee enters into a five-year lease with a lessor to lease specified machinery (an equipment asset). The lease is classified as a finance lease, and there is no purchase option granted to the lessee at lease commencement. The initial measurements of the ROU asset and lease liability are $63,578 and $65,328, respectively.

For the purchase of the asset and termination of the finance lease, the lessee classifies the payment of $17,000 in its year 4 statement of cash flows as follows:

Footnotes

See paragraph BC270 of ASU 2016-02.

To resolve a stakeholder-identified conflict between the example in ASC 942-230-55-2 and the guidance in ASC 842-30-45-5, the FASB issued ASU 2019-01, which clarifies that depository and lending lessors within the scope of ASC 942 would be required to classify principal payments received from sales-type and direct financing leases within investing activities.

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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.