# ASC 740-20-45: Income Taxes — Intraperiod Tax Allocation — 45 Other Presentation Matters Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/740/20/#45-other-presentation-matters) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:528c47a3d4b9ea27e69535a426dd688bcc48d6987311c55a8b9d1a446c6dcb24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-20-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/740/20/#45-other-presentation-matters) SEC content: no #### Allocation of Income Tax Expense or Benefit for the Year ##### [740-20-45-1](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:2cc0820576c3b998d60bff96b5319fa94b6c2e29740aac1f437900eaf6d69f60 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses the requirements to allocate total income tax expense or benefit. Subtopic 740-10 defines the requirements for computing total income tax expense or benefit for an entity. As defined by those requirements, total income tax expense or benefit includes current and deferred [income taxes](https://asc.understandingaccounting.org/glossary/i/#income-taxes "Domestic and foreign federal (national), state, and local (including franchise) taxes based on income."). After determining total income tax expense or benefit under those requirements, the intraperiod tax allocation guidance is used to allocate total income tax expense or benefit to different components of comprehensive income and shareholders' equity. ##### [740-20-45-2](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:205fa70d89a5a33789e40e28c3913fde6f8100115c0205c09df99962115c4a2d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Income tax expense or benefit for the year shall be allocated among: 1. a Continuing operations 2. b Discontinued operations 3. c [Subparagraph superseded by Accounting Standards Update No. 2015-01](https://asc.understandingaccounting.org/updates/asu-2015-01/). 4. d Other comprehensive income 5. e Items charged or credited directly to shareholders' equity. ##### [740-20-45-3](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:afa9478f650ff208d15223799b18cede1ecf00b692b7b3d35b4298ea7d860a54 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The tax benefit of an operating loss carryforward or carryback (other than for the exceptions related to the [carryforwards](https://asc.understandingaccounting.org/glossary/c/#carryforwards "Deductions or credits that cannot be utilized on the tax return during a year that may be carried forward to reduce taxable income or taxes payable in a future year. An operating loss carryforward is an excess of tax deductions over gross income in a year; a tax credit carryforward is the amount by which tax credits available for utilization exceed statutory limitations. Different tax jurisdictions have different rules about whether excess deductions or credits may be carried forward and the length of the carryforward period. The terms carryforward, operating loss carryforward, and tax credit carryforward refer to the amounts of those items, if any, reported in the tax return for the current year.") identified at the end of this paragraph) shall be reported in the same manner as the source of the income or loss in the current year and not in the same manner as the source of the operating loss carryforward or taxes paid in a prior year or the source of expected future income that will result in realization of a [deferred tax asset](https://asc.understandingaccounting.org/glossary/d/#deferred-tax-asset "The deferred tax consequences attributable to deductible temporary differences and carryforwards. A deferred tax asset is measured using the applicable enacted tax rate and provisions of the enacted tax law. A deferred tax asset is reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.") for an operating loss carryforward from the current year. The only exception is the tax effects of deductible temporary differences and carryforwards that are allocated to shareholders' equity in accordance with the provisions of paragraph [740-20-45-11(c) through (f)](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-11). 1. a [Subparagraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). 2. b [Subparagraph not used](https://asc.understandingaccounting.org/updates/page-1833002/). ##### [740-20-45-4](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:b5ab05879cb9868611f6cf64b26690b0ab8e64fde4b82a73f4b2019366216925 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-10-45-20](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-20) requires that changes in the beginning of the year balance of a [valuation allowance](https://asc.understandingaccounting.org/glossary/v/#valuation-allowance "The portion of a deferred tax asset for which it is more likely than not that a tax benefit will not be realized.") caused by changes in judgment about the realization of deferred tax assets in future years are ordinarily allocated to continuing operations. That paragraph also identifies certain exceptions to that allocation guidance related to business combinations and the items specified in paragraph [740-20-45-11(c) through (f)](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-11). The effect of other changes in the balance of a valuation allowance are allocated among continuing operations and items other than continuing operations using the general allocation methodology presented in this Section. ##### [740-20-45-5](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:21b9c2f457838c3f7a397f4194f87b1b2e773170d473b1067d93def698f3ed64 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 740-20-55 for examples of the allocation of total tax expense or benefit to continuing operations, the effect of a tax credit carryforward, and an allocation to other comprehensive income. #### Allocation to Continuing Operations ##### [740-20-45-6](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:c3cb846a057302786c62584c625d4586f5a46cd8a17296ba5f5ef3e41e2a3fa8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses the allocation methodology for allocating total income tax expense or benefit to continuing operations. The amount of income tax expense or benefit allocated to continuing operations may include multiple components. The tax effect of pretax income or loss from current year continuing operations is always one component of the amount allocated to continuing operations. ##### [740-20-45-7](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:7ea5fb32fbda1a7af45a49a898d423115780a587fc2d51f154743e0cb54f2685 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The tax effect of pretax income or loss from continuing operations should be determined by a computation that does not consider the tax effects of items that are not included in continuing operations. ##### [740-20-45-8](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:2aad64232e5b60b66b805ed5675967f8ec7cb88328aa0b8409879f66a7459d18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount allocated to continuing operations is the tax effect of the pretax income or loss from continuing operations that occurred during the year, plus or minus income tax effects of: 1. a Changes in circumstances that cause a change in judgment about the realization of deferred tax assets in future years (see paragraph [740-10-45-20](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-20) for a discussion of exceptions to this allocation for certain items) 2. b Changes in tax laws or rates (see paragraph [740-10-35-4](https://asc.understandingaccounting.org/asc/740/10/#740-10-35-4)) 3. c Changes in tax status (see paragraphs [740-10-25-32](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-32) and [740-10-40-6](https://asc.understandingaccounting.org/asc/740/10/#740-10-40-6)) 4. d Tax-deductible dividends paid to shareholders. The remainder is allocated to items other than continuing operations in accordance with the provisions of paragraphs [740-20-45-12](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-12) and [740-20-45-14](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-14). ##### [740-20-45-9](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:3d216e95e04d4182c9b8eba1f500bb8e3015e65b3e67e65e6c77be81bcf51e90 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraph [740-20-55-1](https://asc.understandingaccounting.org/asc/740/20/#740-20-55-1)) for an example of the allocation of total tax expense or benefit to continuing operations. #### Allocations to Items Other Than Continuing Operations ##### [740-20-45-10](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:5260400c3d9742feb534c0e27c43482ebda75d9b1f9995b7d039e5627913448d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance identifies specific items outside of continuing operations that require an allocation of income tax expense or benefit. It also establishes the methodology for allocation. That methodology differs depending on whether there is only one item other than continuing operations or whether there are multiple items other than continuing operations. ##### [740-20-45-11](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:a4352999f3489ad7c1500e6cf997dc85718205b03bfe638854aed4a331a20c3c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The tax effects of the following items occurring during the year shall be charged or credited directly to other comprehensive income or to related components of shareholders' equity: 1. a Adjustments of the opening balance of retained earnings for certain changes in accounting principles or a correction of an error. Paragraph [250-10-45-8](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-8) addresses the effects of a change in accounting principle, including any related income tax effects. 2. b [Gains and losses included in comprehensive income but excluded from net income](https://asc.understandingaccounting.org/glossary/g/#gains-and-losses-included-in-comprehensive-income-but-excluded-from-net-income "Gains and losses included in comprehensive income but excluded from net income include certain changes in fair values of investments in marketable equity securities classified as noncurrent assets, certain changes in fair values of investments in industries having specialized accounting practices for marketable securities, adjustments related to pension liabilities or assets recognized within other comprehensive income, and foreign currency translation adjustments. Future changes to generally accepted accounting principles (GAAP) may change what is included in this category.") (for example, translation adjustments accounted for under the requirements of Topic 830 and changes in the unrealized holding gains and losses of securities classified as available-for-sale as required by Topic 320). 3. c An increase or decrease in contributed capital (for example, deductible expenditures reported as a reduction of the proceeds from issuing capital stock). 4. d [Subparagraph superseded by Accounting Standards Update No. 2016-09](https://asc.understandingaccounting.org/updates/asu-2016-09/). 5. e [Subparagraph superseded by Accounting Standards Update No. 2016-09](https://asc.understandingaccounting.org/updates/asu-2016-09/). 6. f Deductible temporary differences and carryforwards that existed at the date of a quasi reorganization. 7. g All changes in the tax bases of assets and liabilities caused by transactions among or with shareholders shall be included in equity including the effect of valuation allowances initially required upon recognition of any related deferred tax assets. Changes in valuation allowances occurring in subsequent periods shall be included in the income statement. #### Single Item of Allocation Other Than Continuing Operations ##### [740-20-45-12](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:aced2f29b39527bd6e0f0bd3a5eab8342cb4e58b1c5761201fdd1ddce1fa95e2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If there is only one item other than continuing operations, the portion of income tax expense or benefit for the year that remains after the allocation to continuing operations shall be allocated to that item. ##### [740-20-45-13](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:0b5b39b52ad7d77594b751daebd21a120dbf2896c5bc11495b584fb0016a7b71 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 2 (paragraph [740-20-55-8](https://asc.understandingaccounting.org/asc/740/20/#740-20-55-8)) for an example of the allocation of total tax expense or benefit to continuing operations and one other item. #### Multiple Items of Allocation Other Than Continuing Operations ##### [740-20-45-14](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:3c89c0bae77eacd12f2ef8b80b6dd076a84095a816c1a1bdcc369393f96cddd5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If there are two or more items other than continuing operations, the amount that remains after the allocation to continuing operations shall be allocated among those other items in proportion to their individual effects on income tax expense or benefit for the year. When there are two or more items other than continuing operations, the sum of the separately calculated, individual effects of each item sometimes may not equal the amount of income tax expense or benefit for the year that remains after the allocation to continuing operations. In those circumstances, the procedures to allocate the remaining amount to items other than continuing operations are as follows: 1. a Determine the effect on income tax expense or benefit for the year of the total net loss for all net loss items. 2. b Apportion the tax benefit determined in (a) ratably to each net loss item. 3. c Determine the amount that remains, that is, the difference between the amount to be allocated to all items other than continuing operations and the amount allocated to all net loss items. 4. d Apportion the tax expense determined in (c) ratably to each net gain item. #### Presentation of Deferred Tax Assets Relating to Losses on Available-for-Sale Debt Securities ##### [740-20-45-15](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:db68532e32b73f40fdd39deac33f26b24de1b7950af651f6a42a793a53884f6e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that recognizes a deferred tax asset relating to a net unrealized loss on available-for-sale securities may at the same time conclude that it is more likely than not that some or all of that deferred tax asset will not be realized. In that circumstance, the entity shall report the offsetting entry to the valuation allowance in the component of other comprehensive income classified as unrealized gains and losses on certain investments in [debt securities](https://asc.understandingaccounting.org/glossary/d/#debt-security "Any security representing a creditor relationship with an entity. The term debt security also includes all of the following: Preferred stock that by its terms either must be redeemed by the issuing entity or is redeemable at the option of the investor A collateralized mortgage obligation (or other instrument) that is issued in equity form but is required to be accounted for as a nonequity instrument regardless of how that instrument is classified (that is, whether equity or debt) in the issuer's statement of financial position U.S. Treasury securities U.S. government agency securities Municipal securities Corporate bonds Convertible debt Commercial paper All securitized debt instruments, such as collateralized mortgage obligations and real estate mortgage investment conduits Interest-only and principal-only strips. The term debt security excludes all of the following: Option contracts Financial futures contracts Forward contracts Lease contracts Receivables that do not meet the definition of security and, so, are not debt securities, for example: Trade accounts receivable arising from sales on credit by industrial or commercial entities Loans receivable arising from consumer, commercial, and real estate lending activities of financial institutions.") because the valuation allowance is directly related to the unrealized holding loss on the available-for-sale securities. The entity shall also report the offsetting entry to the valuation allowance in the component of other comprehensive income classified as unrealized gains and losses on certain investments in debt securities if the entity concludes on the need for a valuation allowance in a later interim period of the same fiscal year in which the deferred tax asset is initially recognized. ##### [740-20-45-16](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:188163a9fb11f0eb37fa3fec2509dd40324b3fd45740deef8632832d8b1a7347 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that does not need to recognize a valuation allowance at the same time that it establishes a deferred tax asset relating to a net unrealized loss on available-for-sale securities may, in a subsequent fiscal year, conclude that it is more likely than not that some or all of that deferred tax asset will not be realized. In that circumstance, if an entity initially decided that no valuation allowance was required at the time the unrealized loss was recognized but in a subsequent fiscal year decides that it is more likely than not that the deferred tax asset will not be realized, a valuation allowance shall be recognized. The entity shall include the offsetting entry as an item in determining income from continuing operations. The offsetting entry shall not be included in other comprehensive income. ##### [740-20-45-17](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:738b34c2d29a8a26e95d13e7d2668ce470391c22c2327e77514d06e73b1ab85a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that recognizes a deferred tax asset relating to a net unrealized loss on available-for-sale securities may, at the same time, conclude that a valuation allowance is warranted and in a subsequent fiscal year makes a change in judgment about the level of future years' taxable income such that all or a portion of that valuation allowance is no longer warranted. In that circumstance, the entity shall include any reversals in the valuation allowance due to such a change in judgment in subsequent fiscal years as an item in determining income from continuing operations, even though initial recognition of the valuation allowance affected the component of other comprehensive income classified as unrealized gains and losses on certain investments in debt securities. If, rather than a change in judgment about future years' taxable income, the entity generates taxable income in the current year (subsequent to the year the related deferred tax asset was recognized) that can use the benefit of the deferred tax asset, the elimination (or reduction) of the valuation allowance is allocated to that taxable income. Paragraph [740-10-45-20](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-20) provides additional information. ##### [740-20-45-18](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:32.590Z to 2026-09-10T01:17:32.590Z Record version: sha256:d83a3b5dd4deadae8870a3dc81016e7e3021615df5bf5b94ed241f76e2660ed6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that has recognized a deferred tax asset relating to other deductible temporary differences in a previous fiscal year may at the same time have concluded that no valuation allowance was warranted. If in the current year an entity recognizes a deferred tax asset relating to a net unrealized loss on available-for-sale securities that arose in the current year and at the same time concludes that a valuation allowance is warranted, management shall determine the extent to which the valuation allowance is directly related to the unrealized loss and the other deductible temporary differences, such as an accrual for other postemployment benefits. The entity shall report the offsetting entry to the valuation allowance in the component of other comprehensive income classified as unrealized gains and losses on certain investments in debt securities only to the extent the valuation allowance is directly related to the unrealized loss on the available-for-sale securities that arose in the current year.