FASB Issues Proposed ASU on Accounting for Investments in Tax Credit Structures

The FASB has issued a proposed Accounting Standards Update (ASU), Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method — a consensus of the Emerging Issues Task Force. The proposed ASU would provide that if certain conditions are met, an entity may elect to account for its tax equity investments by using the proportional amortization method regardless of the program from which it receives income tax credits. Any such election would be available on a program-by-program basis. In addition, the proposed ASU would require certain disclosures about the nature and effects of the entity’s investments that generate income tax credits and other income tax benefits.

Comments on the proposed ASU are due by October 6, 2022. For more information, see the press release on the FASB’s Web site.