The Pricing of Realized Tax Benefits from NOL Carryforwards: Effect of Income Statement Presentation

2008 ◽  
Vol 30 (1) ◽  
pp. 1-27 ◽  
Author(s):  
T. J. Atwood ◽  
J. Kenneth Reynolds
Keyword(s):  
Income Tax ◽  
Accounting Standards ◽  
Income Taxes ◽  
Financial Accounting ◽  
Separate Section ◽  
Income Statement ◽  
Tax Benefits ◽  
One Year ◽  
Tax Expense

ABSTRACT: We examine the pricing of realized tax benefits from net operating loss (NOL) carryforwards across income statement presentations. During the period 1987 through 1992, firms adopting SFAS No. 96 reported these tax benefits as part of income before extraordinary items (via a reduced provision for income tax expense), while non-adopting firms reported these benefits as extraordinary income items under APB No. 11. We provide evidence that NOL tax benefits were priced rationally when reported as extraordinary income items under APB No. 11; however, NOL tax benefits were overpriced, relative to their one-year-ahead persistence, when included in income before extraordinary items under SFAS No. 96. Our results suggest that the rational pricing of income tax information is affected by its presentation in the income statement, despite the clear reporting of sufficient additional details in the footnotes. Our findings provide support for the Financial Accounting Standards Board’s tentative decision to report income taxes in a separate section of the income statement.

scholarly journals Pengaruh Penerapan PSAK No. 46 Terhadap Laporan Laba Rugi Pada Tiga Perusahaan Yang Terdaftar di BEI

2018 ◽  
Vol 2 (1) ◽  
pp. 031-046
Author(s):  
Abdilla Rahmania Kusmala ◽  
Hastoni .
Keyword(s):  
Income Tax ◽  
Stock Exchange ◽  
Accounting Standards ◽  
Income Taxes ◽  
Financial Accounting ◽  
Income Statement ◽  
The Difference ◽  
Deferred Tax Liabilities ◽  
Deferred Tax ◽  
Accounting For Income Taxes

The company follows a accounting standards generally accepted in drawing up the financial statements, namely Financial accounting standards (SAK). For various reasons, that standard is different from the taxation provisions also utilize accounting information. Due to the difference of a few things in Financial accounting standards (SAK) with the provisions of the Regulation militate in% u2013 Invitation taxation. Bond Accountant Indonesia (IAI) has confirmed the Statements of financial accounting standards (PSAK) No. 46 concerning accounting for income taxes, is a new thing in the accounting standards for enterprises in Indonesia. PSAK No. 46.The purpose of this research is to know concerning PSAK NO. 46 and see if PSAK NO. 46 already applied on the PT Astra International Tbk, PT Mustika Ratu Tbk, PT Mayora Indah Tbk. And how its influence from the application of PSAK NO.46 of the income statement of the company. The study was conducted at the corner of Indonesia stock exchange at STIE Kesatuan Bogor. The results showed that in the application of PSAK NO. 46 will develop assets and deferred tax liabilities interest arising due to temporary differences. The influence of the application of PSAK NO. 46 on the income statements give rise to a difference between the burden of income tax with income tax debt resulting from the existence of differences in recognition of tax-deferred interest assets, which is set to PSAK NO. 46.

Inferring U.S. Tax Liability from Financial Statement Information

2009 ◽  
Vol 31 (1) ◽  
pp. 29-63 ◽  
Author(s):  
Petro Lisowsky
Keyword(s):  
Stock Options ◽  
Accounting Standards ◽  
Financial Statements ◽  
Income Taxes ◽  
Financial Accounting ◽  
Financial Statement ◽  
Corporate Tax ◽  
Data Set ◽  
Accounting For Income Taxes ◽  
Tax Expense

Abstract: Using a multi-year matched tax return-financial statement data set, this study builds empirical models that infer U.S. tax liability on the corporate tax return from publicly available financial statement disclosures, including those of Statement on Financial Accounting Standards No. 109, Accounting for Income Taxes. Results show that current U.S. tax expense, the tax benefit from stock options, current-year tax cushion accrual, consolidation book-tax differences, and R&D are informative in inferring actual tax, while intraperiod tax allocation is not. Additionally, the sign of pretax book income and the existence of net operating loss carryforwards are useful partitioning variables in estimating actual tax. In general, for every dollar of current U.S. tax expense reported on the financial statements, approximately $0.70 is reported in U.S. tax liability on the tax return. The models are validated using a holdout sample, providing support for the notion that public parties can reliably use these results to estimate a firm's tax position. Additional tests reveal a hierarchy of subsamples that researchers may employ when maximizing the usefulness of tax-related disclosures in inferring U.S. tax liability.

How Much Will Firms Pay for Earnings That Do Not Exist? Evidence of Taxes Paid on Allegedly Fraudulent Earnings

2004 ◽  
Vol 79 (2) ◽  
pp. 387-408 ◽  
Author(s):  
Merle Erickson ◽  
Michelle Hanlon ◽  
Edward L. Maydew
Keyword(s):  
Stock Options ◽  
Income Taxes ◽  
Financial Accounting ◽  
Accounting Earnings ◽  
Tax Returns ◽  
Tax Benefits ◽  
Additional Income ◽  
Tax Expense

We analyze a sample of firms accused of fraudulently overstating their earnings and examine the extent, if any, to which they paid additional income taxes on the allegedly fraudulent earnings. Based on restatements of current tax expense adjusted for the tax benefits of stock options, the evidence indicates that many firms included the overstated financial accounting income on their tax returns, thus overpaying their taxes in the process of inflating their accounting earnings. We estimate that the median firm sacrificed eight cents in additional income taxes per dollar of inflated pretax earnings. In aggregate, we estimate that the firms in our sample paid $320 million in taxes on overstated earnings of about $3.36 billion. These results indicate how far managers of firms are willing to go when allegedly inflating earnings.

scholarly journals ANALISIS PERHITUNGAN PENYUSUTAN AKTIVA TETAP MENURUT STANDAR AKUNTANSI KEUANGAN DAN PERATURAN PERPAJAKAN PADA CV. SAMIA SEJAHTERA

2018 ◽  
Vol 13 (04) ◽  
Author(s):  
Faneisya Pesak ◽  
Harijanto Sabijono ◽  
Natalia Gerungai
Keyword(s):  
Analytical Method ◽  
Income Tax ◽  
Descriptive Analysis ◽  
Accounting Standards ◽  
Financial Accounting ◽  
Analysis Method ◽  
Income Statement ◽  
Fixed Assets ◽  
The Impact ◽  
Reduction Of Costs

In calculating depreciation of fixed assets may use depreciation method in accordance with financial accounting standards and tax regulations. Differences in recognition of depreciation expense will result in fiscal correction. The purpose of this study was conducted to find out how the application depreciations of methods of fixed assets according to tax regulations and financial accounting standards, as well as the impact of comparative calculations. The analytical method used is descriptive analysis method. The results show that the company has calculated depreciation expense in accordance with financial accounting standards, but there are still errors in the calculation of depreciation, and the company itself has not done the calculations in accordance with tax regulations. Any difference in depreciation expense according to financial accounting standards and tax laws will result in a positive fiscal correction resulting in the reduction of costs recognized in the commercial income statement. With the reduction of the recognition of these costs can have an impact on the addition of Income Tax (PPh). Value of PPh CV. Samia Sejahtera 2017 Rp18.323.750,00 while the value of PPh CV. Samia Sejahtera by fiscal Rp28.940.000,00 so there is a difference of Rp10.616.250,00.Keywords : Depreciation, Fixed Assets.

scholarly journals ANALISIS KOREKSI FISKAL DALAM RANGKA PERHITUNGAN PPH BADAN PADA PT. BANK PERKREDITAN RAKYAT NUSA UTARA

2016 ◽  
Vol 11 (1) ◽  
Author(s):  
Brilliant Joy Leonardo Kalangie ◽  
Grace B. Nangoi ◽  
Inggriani Elim
Keyword(s):  
Income Tax ◽  
Accounting Standards ◽  
Financial Statements ◽  
Financial Accounting ◽  
Special Treatment ◽  
Tax Law ◽  
Accounting System ◽  
Income Loss ◽  
Taxable Income ◽  
Income Statement

The income statement is something that is very important in the financial statements. In the income statement presents income (revenue), costs (expenses) and income (profit / losses) a company within a certain time period or periods. Income statement itself is also a financial statement must be derived from the accounting system, both made in accordance with provisions in the Law - Tax Law as well as those in charge based financial Accounting Standards (GAAP). Basically, both of these things (Law - Tax Law and the Financial Accounting Standards) regulate the same thing that is about how much the amount of the charge to the consumer. However, the fiscal correction, we can find something different. This difference is what happens when the accounting of income in measuring too low and unnatural because of special treatment that favor the occurrence of this. Fiscal correction itself is a correction or adjustment must be done before calculating the taxpayer's income tax for corporate taxpayers and tax personal use of accounting in calculating taxable income. The aim of this study was to determine the fiscal correction is done by PT. Rural Bank Nusa North in order calculating corporate income tax. This study took place at the office of PT. Rural Bank Nusa North. The company is located at Jl. Nusantara No. 98 Complex Bersehati Market Manado. The object of this study is the income / loss of PT. Rural Bank Nusa North. This study uses descriptive qualitative research because in practice, such as data, analysis and interpretation of the meaning and the data obtained. In this study, the author will study the financial statements of the profit-rui in 2013 and 3014 were obtained from the company. Then analyzed whether fiscal reconciliation process made are correct and in accordance with regulations Regulations - Tax regulations prevailing in Indonesia at this time. The results showed that the company has made a statement profit / loss of commercial accordance with the applicable accounting standards, and has made statements of income / tax loss properly in accordance with the tax laws and regulations. So it can be taxable income of PT. RB Nusa North, then calculate the income tax in accordance with the calculation of the applicable tax rate on taxable income (PKP) from PT. RB Nusa North.

scholarly journals ANALISIS KOREKSI FISKAL DALAM RANGKA PERHITUNGAN PPH BADAN PT. KAWANUA DASA PRATAMA

2014 ◽  
Vol 8 (3) ◽  
Author(s):  
Felix Daniel Wongso ◽  
Jantje Tinangon ◽  
Stanley Walandouw
Keyword(s):  
Income Tax ◽  
Accounting Standards ◽  
Financial Statements ◽  
The State ◽  
Financial Accounting ◽  
Corporate Income Tax ◽  
Financial Reports ◽  
Taxable Income ◽  
Income Statement ◽  
A Company

PT.Kawanua Dasa Pratama is a company which is a resident and as an entity that has the responsibility to calculate, report, and deposit the tax payable to be paid to the State. However, there are problems that will occurred in the payment of taxes. This is due to the particular financial reports, especially income statement have commercial income statement and fiscal income statement. Both of them are distinctly different, from some point of views about Profit Commercial that refers to the Financial Accounting Standards, while referring to the Act Taxable Income - Tax Act applicable. These differences are simply found in the presence of income and expenses are recognized as income or expense by the company but are not recognized by the Tax. These differences require an adjustment or reconciliation so that the amount of corporate income tax payable are calculated by the company and the tax could be alike. The purpose of this study is to determine the fiscal income statement derived from the financial statements of fiscal correction in the commercial. In this study, obtained after correction of the fiscal profit of Rp 2.241.020.568 and had to pay tax of Rp 560.255.142.

scholarly journals Income Statement Reporting Discretion Allowed by FIN 48: Interest and Penalty Expense Classification

2017 ◽  
Vol 39 (1) ◽  
pp. 45-66 ◽  
Author(s):  
John L. Abernathy ◽  
Brooke Beyer ◽  
Andrew D. Gross ◽  
Eric T. Rapley
Keyword(s):  
Forecast Accuracy ◽  
Tax Avoidance ◽  
Financial Accounting ◽  
Tax Rates ◽  
Financial Accounting Standards Board ◽  
Effective Tax Rates ◽  
Fin 48 ◽  
Income Statement ◽  
Tax Benefits ◽  
Tax Expense

ABSTRACT Financial Accounting Standards Board Interpretation No. 48 (FIN 48, FASB 2006) allows discretion regarding the income statement classification of interest and penalty expenses for unrecognized tax benefits (UTBs). We investigate whether tax avoidance, management compensation, and debt agreements affect the expense classification election and whether this discretion has implications for financial statement users. We find firms that engage in tax avoidance activities, measured by effective tax rates (ETRs) and involvement in tax disputes, are more likely to include interest and penalties in tax expense. We also find that interest and penalties are more likely to be classified as tax expense when CEO compensation is more sensitive to pre-tax income. Finally, we find that UTB interest and penalty expense classification is associated with analysts' ETR forecast accuracy, which suggests there is a potential unintended consequence related to decision usefulness of FIN 48 reporting due to expense classification discretion.

scholarly journals ANALISIS KOREKSI FISKAL UNTUK MENGHITUNG PPH BADAN PADA PT. EMPAT TUJUH ABADI JAYA

2018 ◽  
Vol 13 (02) ◽  
Author(s):  
Mesias Ridel Tulandi ◽  
Harijanto Sabijono ◽  
Sonny Pangerapan
Keyword(s):  
Accounting Standards ◽  
Financial Statements ◽  
Assessment System ◽  
Financial Accounting ◽  
Corporate Tax ◽  
Self Assessment ◽  
Tax Rate ◽  
Income Statement ◽  
Tax Reporting ◽  
A Company

PT. Empat Tujuh Abadi Jaya is a company that is a taxpayer in the form of a body that has responsibility to calculate, deposit and report the tax payable that must be paid to the state based on self-assessment system that gives full trust to the taxpayer in reporting corporate tax. But there is a problem that will be faced in the payment of taxes. This is due to the fact that the financial statements in particular the income statements are different from the commercial profit referring to the Financial Accounting Standards while the fiscal profit refers to the applicable Taxation Law. This difference is simply in the presence of income and expenses recognized as income or expenses by the company but is not recognized by the tax and in the filling as the company does not pay attention to the fiscal correction in tax reporting. For that company must pay attention to fiscal correction / fiscal reconciliation so that the amount of corporate tax payable can be equal to tax. The purpose of this study is to determine the fiscal profit derived from the results of fiscal correction in commercial financial statements to determine the tax payable body. In this study, earnings obtained after the fiscal correction in the financial statements of Rp201,112,732.00 and profit before the fiscal correction of Rp181.510.720,00 for the calculation of corporate taxes using tarif 17 paragraph 2a with tarif 25% Act No. 36 of 2008 Tax The income of the company must pay the tax before it is made Rp45.377.680,00 for the corporate tax rate less attention to the Article 31 E fare with 50% discount from the normal tarif of 25% gross turnover Rp4.8.000.000.000,00 or below and up to Rp50. 000.000.000,00 billion got a discount. Gross circulation of PT. Empat Tujuh Abadi Jaya shall not exceed 4.8M amounting to Rp4,669,400,000.00, so the Company is permitted to use the rate of article 31 E.Keywords: Tax due, Income Statement, Fiscal Correction.

Accounting for Divestitures: A Comparison of Sell-Offs, Spin-Offs, Split-Offs, and Split-Ups

1999 ◽  
Vol 14 (1) ◽  
pp. 75-97 ◽  
Author(s):  
John Cumming ◽  
Tina Y. Mallie
Keyword(s):  
Income Tax ◽  
Accounting Standards ◽  
Financial Accounting ◽  
Federal Income Tax ◽  
Potential Impact ◽  
Financial Press

In the 1990s, the financial press has frequently announced corporate spin-offs and split-offs. Financial accounting textbooks, though, contain little or no coverage of spin-offs, split-offs and other types of divestitures. This paper discusses the reasons for divestitures, identifies four types of divestitures, describes the characteristics and common conditions associated with each type, reviews the accounting standards and federal income tax rules and regulations pertaining to each type, illustrates the application of the accounting standards for each type and discusses the potential impact of these accounting standards and tax rules and regulations on a corporation's choice of one type of divestiture over another. As such, this paper may be used as a supplement in an upper-division financial accounting course.

In Defense of Interperiod Income Tax Allocation

1986 ◽  
Vol 1 (2) ◽  
pp. 90-101 ◽  
Author(s):  
John N. Kissinger
Keyword(s):  
Income Tax ◽  
Income Taxes ◽  
Combination Method ◽  
Tax Effects ◽  
Income Statement

This paper views deferred income taxes as a summary measurement correction that adjusts the various income statement items to an aggregate net-of-tax valuation. Further, the author observes that the tax effects of revenue timing differences are conceptually distinct from the tax effects of expense timing differences and concludes that the FASB should adopt a combination method of comprehensive interperiod allocation.

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