Deloitte
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Chapter 5 — Accounting Matters

5.9 Income Taxes

5.9 Income Taxes

An IPO typically increases the complexity of accounting for income taxes. For example, in an IPO involving a carved-out portion of a larger entity, the tax provision may be prepared for the first time for multiple periods, in which case an entity may be required to use significant judgment in assessing the accounting and presentation of income taxes. Irrespective of whether the registrant is a carve-out or an existing business, however, changes in tax status, predecessor/successor issues, and other transactions with shareholders in connection with an IPO result in complexities in the calculation and presentation of the income tax provision for the pre- and post-IPO periods. In addition, for interim reporting, possible limitations on future deductions may need to be assessed as well as additional disclosure requirements.

Footnotes

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Note that other tax-related disclosure requirements may apply to particular transactions.