# ASC 740-30-05: Income Taxes — Other Considerations or Special Areas — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/740/30/#05-overview-and-background) 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): 2026-09-10T01:17:44.780Z to 2026-09-10T01:17:44.780Z Record version: sha256:7b243595d86849d410ed6c764e86e50f4664a2f2c9a487cf289d55568a0bb6b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-30-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/740/30/#05-overview-and-background) SEC content: no #### Undistributed Earnings of Subsidiaries and Corporate Joint Ventures ##### [740-30-05-1](https://asc.understandingaccounting.org/asc/740/30/#740-30-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:44.780Z to 2026-09-10T01:17:44.780Z Record version: sha256:0da3d9b10f54e16c55d7347defeb145f41c61fffcfbc2c8ea4f154e35e489359 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Subtopic 740-10 addresses the majority of tax accounting issues. That Subtopic addresses the majority of differences between the financial reporting (or book) basis and tax basis of assets and liabilities (basis differences) and the requirements to record 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.") on those differences. It also identifies specific and limited exceptions to the otherwise required recognition of deferred taxes on basis differences. ##### [740-30-05-2](https://asc.understandingaccounting.org/asc/740/30/#740-30-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:44.780Z to 2026-09-10T01:17:44.780Z Record version: sha256:53c3f100d0b8e8be33714807c4534039d48de7cf90921de48a2f32957dac9b6d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides the required accounting and disclosure guidance for certain of the specific limited exceptions identified in Subtopic 740-10 to the requirements to record deferred taxes on specific basis differences related to investments in subsidiaries and corporate joint ventures arising from undistributed earnings or other causes. ##### [740-30-05-3](https://asc.understandingaccounting.org/asc/740/30/#740-30-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:44.780Z to 2026-09-10T01:17:44.780Z Record version: sha256:cfc6fd3463330ff67a84d5de83462d60eb2ac60bc8d3d6c601d177acc7b87556 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting addressed in this Subtopic represents, in some situations, an exception to the otherwise required comprehensive recognition of deferred income taxes for temporary differences. ##### [740-30-05-4](https://asc.understandingaccounting.org/asc/740/30/#740-30-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:44.780Z to 2026-09-10T01:17:44.780Z Record version: sha256:6acf8c4117b7beea84e602f7256a8ab56591f4382eebe059f0d0310617b8c674 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A domestic or foreign subsidiary remits earnings to a parent entity after the parties consider numerous factors, including the following: 1. a Financial requirements of the parent entity 2. b Financial requirements of the subsidiary 3. c Operational and fiscal objectives of the parent entity, both long-term and short-term 4. d Remittance restrictions imposed by governments 5. e Remittance restrictions imposed by lease or financing agreements of the subsidiary 6. f [Tax consequences](https://asc.understandingaccounting.org/glossary/t/#tax-consequences "The effects on income taxes—current or deferred—of an event.") of the remittance. ##### [740-30-05-5](https://asc.understandingaccounting.org/asc/740/30/#740-30-05-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:44.780Z to 2026-09-10T01:17:44.780Z Record version: sha256:5ee6f69a6d30793e2f8d4ec79d181024cb4b0939c7f2c83c45b5aafc8a31d15d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Remittance of earnings of a subsidiary may sometimes be indefinite because of the specific long-term investment plans and objectives of the parent entity. Even in the absence of long-term investment plans, the flexibility inherent in the U.S. Internal Revenue Code may permit a parent entity to postpone income taxes on the earnings of a subsidiary for an extended period or may permit the ultimate distribution to be taxed at special rates applicable to the nature of the distribution. Other circumstances may indicate that the earnings will probably be remitted in the foreseeable future. However, the parent entity may control the events that create the tax consequences in either circumstance. ##### [740-30-05-6](https://asc.understandingaccounting.org/asc/740/30/#740-30-05-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:44.780Z to 2026-09-10T01:17:44.780Z Record version: sha256:80b8327452de9f4e885568f431d5854d2e032cb2d022005a8dc689a39cbd014b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Corporate joint ventures](https://asc.understandingaccounting.org/glossary/c/#corporate-joint-venture "A corporation owned and operated by a small group of entities (the joint venturers) as a separate and specific business or project for the mutual benefit of the members of the group. A government may also be a member of the group. The purpose of a corporate joint venture frequently is to share risks and rewards in developing a new market, product or technology; to combine complementary technological knowledge; or to pool resources in developing production or other facilities. A corporate joint venture also usually provides an arrangement under which each joint venturer may participate, directly or indirectly, in the overall management of the joint venture. Joint venturers thus have an interest or relationship other than as passive investors. An entity that is a subsidiary of one of the joint venturers is not a corporate joint venture. The ownership of a corporate joint venture seldom changes, and its stock is usually not traded publicly. A noncontrolling interest held by public ownership, however, does not preclude a corporation from being a corporate joint venture.") are of two kinds: those essentially permanent in duration and those that have a life limited by the nature of the venture or other business activity. ##### [740-30-05-7](https://asc.understandingaccounting.org/asc/740/30/#740-30-05-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:44.780Z to 2026-09-10T01:17:44.780Z Record version: sha256:1616152b7e6998c0f15a2d8fea145c01ef9982260176ed91184d6d637c981cfe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unless characteristics indicate a limited life, a corporate joint venture has many of the characteristics of a subsidiary. The investors usually participate in the management of the joint venture, consider the factors set forth in paragraph [740-30-05-4](https://asc.understandingaccounting.org/asc/740/30/#740-30-05-4), and agree (frequently before forming the venture) as to plans for long-term investment, for utilizing the flexibility inherent in the U.S. Internal Revenue Code, and for planned remittances.