# ASC 323-740-S99: Investments—Equity Method and Joint Ventures — Income Taxes—Proportional Amortization Method — SEC 99 SEC Materials

Source: FASB Accounting Standards Codification, Basic View

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## ASC 323-740-S99: SEC 99 SEC Materials

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#### SEC Staff Guidance

##### [323-740-S99-1](https://asc.understandingaccounting.org/asc/323/740/#323-740-S99-1)

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The following is the text of SAB Topic 6.I.2, Taxes of Investee Company.

-   Question: If a registrant records its share of earnings or losses of a 50% or less owned person on the equity basis and such person has an effective tax rate which differs by more than 5% from the applicable statutory Federal income tax rate, is a reconciliation as required by Rule 4-08(g) \[paragraph [235-10-S99-1](https://asc.understandingaccounting.org/asc/235/10/#235-10-S99-1)\] necessary?
    
-   Interpretive Response: Whenever the tax components are known and material to the investor's (registrant's) financial position or results of operations, appropriate disclosure should be made. In some instances where 50% or less owned persons are accounted for by the equity method of accounting in the financial statements of the registrant, the registrant may not know the rate at which the various components of income are taxed and it may not be practicable to provide disclosure concerning such components.
    
-   It should also be noted that it is generally necessary to disclose the aggregate dollar and per-share effect of situations where temporary tax exemptions or "tax holidays" exist, and that such disclosures are also applicable to 50% or less owned persons. Such disclosures should include a brief description of the factual circumstances and give the date on which the special tax status will terminate. See Topic 11.C \[paragraph [740-10-S99-2](https://asc.understandingaccounting.org/asc/740/10/#740-10-S99-2)\].

### Qualified Affordable Housing Project Investments

##### [323-740-S99-2](https://asc.understandingaccounting.org/asc/323/740/#323-740-S99-2)

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The following is the text of SEC Observer Comment: Accounting for Tax Benefits Resulting from Investments in Qualified Affordable Housing Projects. **\[The SEC Staff conformed this Comment to the guidance issued in Accounting Standards Update No. 2014-01, _Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects_.\]**

-   It has been observed that the decision to apply the proportional amortizationmethod of accounting is an accounting policy decision to be applied consistently to all investments in qualified affordable housing projects that meet the conditions in paragraph [323-740-25-1](https://asc.understandingaccounting.org/asc/323/740/#323-740-25-1) rather than a decision to be applied to individual investments that qualify for use of the proportional amortization method. The SEC staff believes that it would be inappropriate to extend the proportional amortization method of accounting to situations analogous to those described in paragraph [323-740-05-3](https://asc.understandingaccounting.org/asc/323/740/#323-740-05-3).