# ASC 740-30: Income Taxes — Other Considerations or Special Areas Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/740/30/) 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): 2026-09-10T01:17:41.308Z to 2026-09-10T01:18:06.039Z Record version: sha256:b2d00d63b653fe0056df8f132803e0645ff4bd42b872b858dc393c3b5bd33d56 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-30: Income Taxes — Other Considerations or Special Areas ### Machine-generated study aids ```json { "summary": "ASC 740-30 governs the limited exceptions to comprehensive deferred tax recognition for temporary differences (outside basis differences) arising from investments in subsidiaries and corporate joint ventures, principally undistributed earnings. The starting presumption is that all undistributed earnings of a subsidiary will be transferred to the parent and thus create a taxable temporary difference (740-30-25-3), but that presumption can be overcome by the \"indefinite reversal criteria\" for foreign subsidiaries/foreign corporate joint ventures essentially permanent in duration and for pre-December 16, 1992 domestic undistributed earnings (740-30-25-17 and 25-18). Deferred tax assets for excess outside tax basis are recognized only if it is apparent the difference will reverse in the foreseeable future (740-30-25-9).", "key_points": [ "Undistributed earnings of a subsidiary included in consolidated income (or under the equity method) are presumed to be transferred to the parent and are accounted for as a temporary difference unless tax law provides a means by which the investment in a domestic subsidiary can be recovered tax free (740-30-25-2 through 25-3, 25-7).", "A deferred tax liability must be recognized for an excess of financial reporting over tax basis of an investment in a domestic subsidiary arising in fiscal years beginning after December 15, 1992, and for a 50-percent-or-less-owned investee (except a corporate joint venture essentially permanent in duration) (740-30-25-5).", "No deferred tax liability is recognized, unless reversal in the foreseeable future becomes apparent, for the excess book-over-tax basis of a foreign subsidiary or foreign corporate joint venture essentially permanent in duration, or for undistributed earnings of a domestic subsidiary/joint venture arising in fiscal years beginning on or before December 15, 1992 (LIFO pattern) (740-30-25-18).", "The presumption of remittance is overcome only with sufficient evidence of specific plans for indefinite reinvestment or a tax-free liquidation—the indefinite reversal criteria—which cannot be applied to inside basis differences of foreign subsidiaries (740-30-25-17).", "A deferred tax asset for an excess of tax basis over financial reporting amount of an investment in a subsidiary or an essentially permanent corporate joint venture is recognized only if it is apparent the difference will reverse in the foreseeable future (e.g., a decision to sell the subsidiary), subject to a valuation allowance assessment (740-30-25-9 through 25-11).", "Changes in expectations—remittance becoming apparent, previously accrued earnings that will not be remitted, or an investee ceasing to be a subsidiary—are accrued or adjusted in income tax expense of the current period (740-30-25-15, 25-19, 740-30-45-2 through 45-3).", "Disclosure is required of the types of temporary differences for which no deferred tax liability is recognized and events that would make them taxable, the cumulative amount of each type, and the unrecognized deferred tax liability for foreign subsidiaries/joint ventures or a statement that determination is not practicable (740-30-50-2)." ], "categories": [ "Income taxes", "Recognition", "Disclosure", "Consolidation" ], "audience_level": "advanced", "student_note": "This is the classic \"APB 23\" indefinite reinvestment exception—exam questions test that it is a narrow exception (foreign subsidiaries and pre-1993 domestic earnings), not a general election. A common misunderstanding is symmetry: the exception suspends deferred tax liabilities, while deferred tax assets for excess outside tax basis require the higher \"apparent reversal in the foreseeable future\" hurdle.", "related_topics": [ "740-10", "740-20", "205-20", "323-10", "942-740", "810-10" ], "key_concepts": [ "outside basis difference", "undistributed earnings", "indefinite reversal criteria", "deferred tax liability", "corporate joint venture essentially permanent in duration", "foreign subsidiary", "valuation allowance", "tax-free recovery of investment" ] } ``` Source downloaded (UTC): 2026-09-10T01:17:41.308Z to 2026-09-10T01:17:41.308Z Record version: sha256:59c5a039158431196b843c1f6e715931650a55bd761c97964d1dc85f7eed8cb9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-30-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/740/30/#00-status) SEC content: no ##### [740-30-00-1](https://asc.understandingaccounting.org/asc/740/30/#740-30-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:41.308Z to 2026-09-10T01:17:41.308Z Record version: sha256:9897d66f80b3ab700a1eaa0216c310a2a42b576cd515bf9c89eba2bc6d4117bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
Corporate Joint VentureAmendedAccounting Standards Update No. 2010-0802/02/2010
SubsidiarySupersededAccounting Standards Update No. 2015-1006/12/2015
Temporary DifferenceAmendedAccounting Standards Update No. 2016-1610/24/2016
740-30-05-4AmendedAccounting Standards Update No. 2015-1006/12/2015
740-30-25-2AmendedAccounting Standards Update No. 2015-1006/12/2015
740-30-25-7AmendedAccounting Standards Update No. 2010-0802/02/2010
740-30-25-10AmendedAccounting Standards Update No. 2014-0804/10/2014
740-30-25-15AmendedAccounting Standards Update No. 2019-1212/18/2019
740-30-25-15AmendedAccounting Standards Update No. 2015-0101/09/2015
740-30-25-16AmendedAccounting Standards Update No. 2019-1212/18/2019
740-30-25-19AmendedAccounting Standards Update No. 2015-0101/09/2015
740-30-45-2AmendedAccounting Standards Update No. 2015-1006/12/2015
740-30-45-2AmendedAccounting Standards Update No. 2015-0101/09/2015
740-30-45-3AmendedAccounting Standards Update No. 2019-1212/18/2019
740-30-45-3AmendedAccounting Standards Update No. 2015-0101/09/2015
740-30-50-2AmendedAccounting Standards Update No. 2023-0912/14/2023
740-30-60-1AddedAccounting Standards Update No. 2018-0605/07/2018
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. Source downloaded (UTC): 2026-09-10T01:17:47.883Z to 2026-09-10T01:17:47.883Z Record version: sha256:72cfcf7aeb10d8aa87dbaea215c8916785ec82fa4cd2c86beabea7d944477f51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-30-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/740/30/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [740-30-15-1](https://asc.understandingaccounting.org/asc/740/30/#740-30-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:47.883Z to 2026-09-10T01:17:47.883Z Record version: sha256:1c389e8988f75107b02ca6ea625254237047b4d36580a3e386ce7442b81eaaf8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 740-10-15, with specific transaction qualifications noted below. #### Transactions ##### [740-30-15-2](https://asc.understandingaccounting.org/asc/740/30/#740-30-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:47.883Z to 2026-09-10T01:17:47.883Z Record version: sha256:b71d271864f51d88154b7fbbf9ce7d82348979276eb78fee8ebf2c1ee3810271 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic applies to basis differences arising from investments in subsidiaries and corporate joint ventures. ##### [740-30-15-3](https://asc.understandingaccounting.org/asc/740/30/#740-30-15-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:47.883Z to 2026-09-10T01:17:47.883Z Record version: sha256:25e931aba725c3ec5fecd26de07c00051f058ac6640dedb0fa37d33aebafc667 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The basis differences addressed in this Subtopic represent situations where there are exceptions to the general requirements established in the Overall Subtopic for the comprehensive recognition of 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 temporary differences. ##### [740-30-15-4](https://asc.understandingaccounting.org/asc/740/30/#740-30-15-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:47.883Z to 2026-09-10T01:17:47.883Z Record version: sha256:05d3e57d34fa91cc4c874d5989141cd7c690e4121b46eed909e195c17a2cbb7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. There are other exceptions to the comprehensive recognition of deferred income taxes on temporary differences specifically addressed in other Subtopics. However; the provisions of this Subtopic shall not be applied to analogous types of temporary differences. Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:3a29e504613fd90d3b82142069987854f63c36a052b908421d0198efed612aed Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-30-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/740/30/#25-recognition) SEC content: no #### Undistributed Earnings of Subsidiaries and Corporate Joint Ventures ##### [740-30-25-1](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:e0c2b35edf22676673d264cc5da3f1d6154ad94a7612273b4a1e40aa1b810da0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides guidance on the accounting for specific temporary differences related to investments in subsidiaries and [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."), including differences arising from undistributed earnings. In certain situations, these temporary differences may be accounted for differently from the accounting that otherwise requires comprehensive recognition of 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.") for temporary differences. ##### [740-30-25-2](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:7d6754a2beb7c4149f45e34b2989e00ed457a53face2148dafe4ebc618d17924 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Including undistributed earnings of a subsidiary (which would include the undistributed earnings of a domestic international sales corporation eligible for tax deferral) in the pretax accounting income of a parent entity either through consolidation or accounting for the investment by the equity method results in a [temporary difference](https://asc.understandingaccounting.org/glossary/t/#temporary-difference "A difference between the tax basis of an asset or liability computed pursuant to the requirements in Subtopic 740-10 for tax positions, and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively. Paragraph 740-10-25-20 cites examples of temporary differences. Some temporary differences cannot be identified with a particular asset or liability for financial reporting (see paragraphs 740-10-05-10 and 740-10-25-24740-10-25-25), but those temporary differences do meet both of the following conditions: Result from events that have been recognized in the financial statements Will result in taxable or deductible amounts in future years based on provisions of the tax law. Some events recognized in financial statements do not have tax consequences. Certain revenues are exempt from taxation and certain expenses are not deductible. Events that do not have tax consequences do not give rise to temporary differences."). ##### [740-30-25-3](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:b5bf6a36e8b40cbbcbb4845e7c3e4f626ae55d8b7ec6d8a11ffa3e5b3644ff57 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It shall be presumed that all undistributed earnings of a subsidiary will be transferred to the parent entity. Accordingly, the undistributed earnings of a subsidiary included in consolidated income shall be accounted for as a temporary difference unless the tax law provides a means by which the investment in a domestic subsidiary can be recovered tax free. ##### [740-30-25-4](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:3b6a4fbfd0c0bfac08181c927d34ae1e26d9d9b70e21f337a8a79a24b166351a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The principles applicable to undistributed earnings of subsidiaries in this Section also apply to tax effects of differences between [taxable income](https://asc.understandingaccounting.org/glossary/t/#taxable-income "The excess of taxable revenues over tax deductible expenses and exemptions for the year as defined by the governmental taxing authority.") and pretax accounting income attributable to earnings of corporate joint ventures that are essentially permanent in duration and are accounted for by the equity method. Certain corporate joint ventures have a life limited by the nature of the venture, project, or other business activity. Therefore, a reasonable assumption is that a part or all of the undistributed earnings of the venture will be transferred to the investor in a taxable distribution. Deferred taxes shall be recorded, in accordance with the requirements of Subtopic 740-10 at the time the earnings (or losses) are included in the investor's income. ##### [740-30-25-5](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:b01ace5c6a2e718247fc550828c02ef5da36b99aeff39e47876f890f79088e44 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [deferred tax liability](https://asc.understandingaccounting.org/glossary/d/#deferred-tax-liability "The deferred tax consequences attributable to taxable temporary differences. A deferred tax liability is measured using the applicable enacted tax rate and provisions of the enacted tax law.") shall be recognized for both of the following types of taxable temporary differences: 1. a An excess of the amount for financial reporting over the tax basis of an investment in a domestic subsidiary that arises in fiscal years beginning after December 15, 1992 2. b An excess of the amount for financial reporting over the tax basis of an investment in a 50-percent-or-less-owned investee except as provided in paragraph [740-30-25-18](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-18) for a corporate joint venture that is essentially permanent in duration. Paragraphs [740-30-25-9](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-9) and [740-30-25-18](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-18) identify exceptions to the accounting that otherwise requires comprehensive recognition of deferred income taxes for temporary differences arising from investments in subsidiaries and corporate joint ventures. ##### [740-30-25-6](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:d4e0af391776ac30ff28783a9171924eb9ca445df8cc7a799b44e8f1534e1df4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-30-25-18](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-18) provides that a deferred tax liability is not recognized for either of the following: 1. a An excess of the amount for financial reporting over the tax basis of an investment in a foreign subsidiary that meets the criteria in paragraph [740-30-25-17](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-17) 2. b Undistributed earnings of a domestic subsidiary that arose in fiscal years beginning on or before December 15, 1992, and that meet the criteria in paragraph [740-30-25-17](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-17). The criteria in that paragraph do not apply to undistributed earnings of domestic subsidiaries that arise in fiscal years beginning after December 15, 1992, and as required by the preceding paragraph, a deferred tax liability shall be recognized if the undistributed earnings are a [taxable temporary difference](https://asc.understandingaccounting.org/glossary/t/#taxable-temporary-difference "Temporary differences that result in taxable amounts in future years when the related asset is recovered or the related liability is settled. See Temporary Difference."). ##### [740-30-25-7](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:111beef9d5372c85ba1800c29b7736a034e76db3ade5146ce0a001148c927d8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Whether an excess of the amount for financial reporting over the tax basis of an investment in a more-than-50-percent-owned domestic subsidiary is a taxable temporary difference shall be assessed. It is not a taxable temporary difference if the tax law provides a means by which the reported amount of that investment can be recovered tax-free and the entity expects that it will ultimately use that means. For example, tax law may provide that: 1. a An entity may elect to determine taxable gain or loss on the liquidation of an 80-percent-or-more-owned subsidiary by reference to the tax basis of the subsidiary's net assets rather than by reference to the [parent](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)") entity's tax basis for the stock of that subsidiary. 2. b An entity may execute a statutory merger whereby a subsidiary is merged into the parent entity, the noncontrolling shareholders receive stock of the parent, the subsidiary's stock is cancelled, and no taxable gain or loss results if the continuity of ownership, continuity of business entity, and certain other requirements of the tax law are met. ##### [740-30-25-8](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:69e82d7775693fbd548a925e2e910bfdc5af755677b988b3936f9d99eecad0fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Some elections for tax purposes are available only if the parent owns a specified percentage of the subsidiary's stock. The parent sometimes may own less than that specified percentage, and the price per share to acquire a [noncontrolling interest](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest.") may significantly exceed the per-share equivalent of the amount reported as noncontrolling interest in the [consolidated financial statements](https://asc.understandingaccounting.org/glossary/c/#consolidated-financial-statements "The financial statements of a consolidated group of entities that include a parent and all its subsidiaries presented as those of a single economic entity."). In those circumstances, the excess of the amount for financial reporting over the tax basis of the parent's investment in the subsidiary is not a taxable temporary difference if settlement of the noncontrolling interest is expected to occur at the point in time when settlement would not result in a significant cost. That could occur, for example, toward the end of the life of the subsidiary, after it has recovered and settled most of its assets and liabilities, respectively. The fair value of the noncontrolling interest ordinarily will approximately equal its percentage of the subsidiary's net assets if those net assets consist primarily of cash. ##### [740-30-25-9](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:a0140433123e2361bc8d4b8020839275c207bbc9498d2d5d6355b1bb6fe4c71e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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.") shall be recognized for an excess of the tax basis over the amount for financial reporting of an investment in a subsidiary or corporate joint venture that is essentially permanent in duration only if it is apparent that the temporary difference will reverse in the foreseeable future. ##### [740-30-25-10](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:c320f8f516efab1dc2f2a5cf69780042084cf61572b44034756cd18562b2ad1e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, if an entity decides to sell a subsidiary that meets the requirements of paragraphs [205-20-45-1A through 45-1D](https://asc.understandingaccounting.org/asc/205/20/#205-20-45-1A) for measurement and display as a discontinued operation and the parent entity's tax basis in the stock of the subsidiary (outside tax basis) exceeds the financial reporting amount of the investment in the subsidiary, the decision to sell the subsidiary makes it apparent that the [deductible temporary difference](https://asc.understandingaccounting.org/glossary/d/#deductible-temporary-difference "Temporary differences that result in deductible amounts in future years when the related asset or liability is recovered or settled, respectively. See Temporary Difference.") will reverse in the foreseeable future. Assuming in this example that it is more likely than not that the deferred tax asset will be realized, the tax [benefit](https://asc.understandingaccounting.org/glossary/b/#benefit "See Tax (or Benefit).") for the excess of outside tax basis over financial reporting basis shall be recognized when it is apparent that the temporary difference will reverse in the foreseeable future. The same criterion shall apply for the recognition of a deferred tax liability related to an excess of financial reporting basis over outside tax basis of an investment in a subsidiary that was previously not recognized under the provisions of paragraph [740-30-25-18](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-18). ##### [740-30-25-11](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:d91787055aa34db3e621ce353ecba493e409b73b6ae6ccc69cbfa61d245e8b18 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The need for 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.") for the deferred tax asset referred to in paragraph [740-30-25-9](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-9) and other related deferred tax assets, such as a deferred tax asset for foreign tax credit [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."), shall be assessed. ##### [740-30-25-12](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:6ffab6cfef6f16e49348fe5687a3683b1f42d649f1258b0871a52b6f507f479d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-10-30-18](https://asc.understandingaccounting.org/asc/740/10/#740-10-30-18) identifies four sources of taxable income to be considered in determining the need for and amount of a valuation allowance for those and other deferred tax assets. One source is future reversals of temporary differences. ##### [740-30-25-13](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:050e72ead72d549540b4aa5b9a842023ab23c7369dd7ae2dbc72603e3fce1103 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Future distributions of future earnings of a subsidiary or corporate joint venture, however, shall not be considered except to the extent that a deferred tax liability has been recognized for existing undistributed earnings or earnings have been remitted in the past. ##### [740-30-25-14](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:df19c3707b1b458a524675e6d8ab242abc42880fc7a53474c7e09c676e0c1c62 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A tax benefit shall not be recognized, however, for tax deductions or favorable tax rates attributable to future dividends of undistributed earnings for which a deferred tax liability has not been recognized under the requirements of paragraph [740-30-25-18](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-18). ##### [740-30-25-15](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:c5608319bff3d91926f9f90cd31675d27b7ed6ab727a477baf26d96ef053b75b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An investment in common stock of a subsidiary may change so that it is no longer a subsidiary because the parent entity sells a portion of the investment, the subsidiary sells additional stock, or other transactions affect the investment. If a parent entity did not recognize income taxes on its equity in undistributed earnings of a subsidiary for the reasons cited in paragraph [740-30-25-17](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-17) (and the entity in which the investment is held ceases to be a subsidiary), it shall accrue in the current period income taxes on the temporary difference related to its remaining investment in common stock in accordance with the guidance in Subtopic 740-10. ##### [740-30-25-16](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:23ab96b8c89b346406fed14b8a14b1702bfc976634b3846dc3082f2567ca9f9b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2019-12](https://asc.understandingaccounting.org/updates/asu-2019-12/) ##### [740-30-25-17](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:78bca784b059591122e7ba5ecd13a54f5d744b5b47dd6c20d87eb1c43ed0139d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The presumption in paragraph [740-30-25-3](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-3) that all undistributed earnings will be transferred to the parent entity may be overcome, and no income taxes shall be accrued by the parent entity, for entities and periods identified in the following paragraph if sufficient evidence shows that the subsidiary has invested or will invest the undistributed earnings indefinitely or that the earnings will be remitted in a tax-free liquidation. A parent entity shall have evidence of specific plans for reinvestment of undistributed earnings of a subsidiary which demonstrate that remittance of the earnings will be postponed indefinitely. These criteria required to overcome the presumption are sometimes referred to as the indefinite reversal criteria. Experience of the entities and definite future programs of operations and remittances are examples of the types of evidence required to substantiate the parent entity's representation of indefinite postponement of remittances from a subsidiary. The indefinite reversal criteria shall not be applied to the inside basis differences of foreign subsidiaries. ##### [740-30-25-18](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:e3c9b898d153eb6a18b5b7358b9b036b5d27d113e7543cc89b6c6825086450c4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [740-10-25-3](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-3), a deferred tax liability shall not be recognized for either of the following types of temporary differences unless it becomes apparent that those temporary differences will reverse in the foreseeable future: 1. a An excess of the amount for financial reporting over the tax basis of an investment in a foreign subsidiary or a foreign corporate joint venture that is essentially permanent in duration 2. b Undistributed earnings of a domestic subsidiary or a domestic corporate joint venture that is essentially permanent in duration that arose in fiscal years beginning on or before December 15, 1992. A last-in, first-out (LIFO) pattern determines whether reversals pertain to differences that arose in fiscal years beginning on or before December 15, 1992. ##### [740-30-25-19](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:53.003Z to 2026-09-10T01:17:53.003Z Record version: sha256:b34549f9d432bbc9d9c4623919cd90e17745ec12f26bebe826598ff32387907d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If circumstances change and it becomes apparent that some or all of the undistributed earnings of a subsidiary will be remitted in the foreseeable future but income taxes have not been recognized by the parent entity, it shall accrue as an expense of the current period income taxes attributable to that remittance. If it becomes apparent that some or all of the undistributed earnings of a subsidiary on which income taxes have been accrued will not be remitted in the foreseeable future, the parent entity shall adjust income tax expense of the current period. Source downloaded (UTC): 2026-09-10T01:17:55.307Z to 2026-09-10T01:17:55.307Z Record version: sha256:029dd4a2662027e085eb51b54c6473bb5cbd937ccaeb5fa87d89faf26d492337 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-30-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/740/30/#45-other-presentation-matters) SEC content: no #### Undistributed Earnings of Subsidiaries and Corporate Joint Ventures ##### [740-30-45-1](https://asc.understandingaccounting.org/asc/740/30/#740-30-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:55.307Z to 2026-09-10T01:17:55.307Z Record version: sha256:8f4f3f5d267aa30b860d9107f6c61fe6baa0158bcd098c8289841e458bc3b7db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses presentation in the income statement of specific types of adjustments to [income taxes](https://asc.understandingaccounting.org/glossary/i/#income-taxes "Domestic and foreign federal (national), state, and local (including franchise) taxes based on income."). The specific types of adjustments addressed result from either the recognition or derecognition of deferred income taxes related to exceptions to comprehensive recognition of deferred income taxes arising from investments in subsidiaries and corporate joint ventures. ##### [740-30-45-2](https://asc.understandingaccounting.org/asc/740/30/#740-30-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:55.307Z to 2026-09-10T01:17:55.307Z Record version: sha256:781ce353bc2db9ae985d0bfaefc3c4b159457c8a85196a97306d1450150f1cbc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-30-25-18](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-18) identifies situations where deferred tax liabilities are not recorded for specific temporary differences. Paragraph [740-30-25-19](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-19) provides that if circumstances change and it becomes apparent that some or all of the undistributed earnings of a subsidiary will be remitted in the foreseeable future but income taxes have not been recognized by the parent entity, it shall accrue as an expense of the current period income taxes attributable to that remittance. If it becomes apparent that some or all of the undistributed earnings of a subsidiary on which income taxes have been accrued will not be remitted in the foreseeable future, the parent entity shall adjust income tax expense of the current period. ##### [740-30-45-3](https://asc.understandingaccounting.org/asc/740/30/#740-30-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:55.307Z to 2026-09-10T01:17:55.307Z Record version: sha256:aea6a2929a77478c4dc42e4b4c0ef5e17b23860df1c4ce570d99fe7df9fd8225 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If a parent entity did not recognize income taxes on its equity in undistributed earnings of a subsidiary for the reasons cited in paragraph [740-30-25-17](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-17) and the entity in which the investment is held ceases to be a subsidiary, paragraph [740-30-25-15](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-15) requires that it shall accrue in the current period income taxes on the temporary difference related to its remaining investment in common stock in accordance with the guidance in Subtopic 740-10. Source downloaded (UTC): 2026-09-10T01:17:58.404Z to 2026-09-10T01:17:58.404Z Record version: sha256:4534acec7dad3bcb7ad85b9e88450244c17eb22fbe51b1f3708ea0e2cb4b8f61 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-30-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/740/30/#50-disclosure) SEC content: no #### Undistributed Earnings of Subsidiaries and Corporate Joint Ventures ##### [740-30-50-1](https://asc.understandingaccounting.org/asc/740/30/#740-30-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:17:58.404Z to 2026-09-10T01:17:58.404Z Record version: sha256:e7b07aea518ce4056f1391f562008c7796bedd61bfb0e97b9e3e6f3a3fb263d7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance establishes disclosure requirements applicable to unrecognized deferred tax liabilities related to investments in subsidiaries and corporate joint ventures. ##### [740-30-50-2](https://asc.understandingaccounting.org/asc/740/30/#740-30-50-2) Pending content: yes Source downloaded (UTC): 2026-09-10T01:17:58.404Z to 2026-09-10T01:17:58.404Z Record version: sha256:cb18d29c27ec70e16c10a7817931cc05a948b4cb4730eea48985247b5050cd70 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. All of the following information shall be disclosed whenever a [deferred tax liability](https://asc.understandingaccounting.org/glossary/d/#deferred-tax-liability "The deferred tax consequences attributable to taxable temporary differences. A deferred tax liability is measured using the applicable enacted tax rate and provisions of the enacted tax law.") is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures: 1. a A description of the types of temporary differences for which a deferred tax liability has not been recognized and the types of events that would cause those temporary differences to become taxable 2. b The cumulative amount of each type of [temporary difference](https://asc.understandingaccounting.org/glossary/t/#temporary-difference "A difference between the tax basis of an asset or liability computed pursuant to the requirements in Subtopic 740-10 for tax positions, and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively. Paragraph 740-10-25-20 cites examples of temporary differences. Some temporary differences cannot be identified with a particular asset or liability for financial reporting (see paragraphs 740-10-05-10 and 740-10-25-24740-10-25-25), but those temporary differences do meet both of the following conditions: Result from events that have been recognized in the financial statements Will result in taxable or deductible amounts in future years based on provisions of the tax law. Some events recognized in financial statements do not have tax consequences. Certain revenues are exempt from taxation and certain expenses are not deductible. Events that do not have tax consequences do not give rise to temporary differences.") 3. c The amount of the unrecognized deferred tax liability for temporary differences related to investments in foreign subsidiaries and foreign corporate joint ventures that are essentially permanent in duration if determination of that liability is practicable or a statement that determination is not practicable. While paragraph [740-30-25-14](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-14) prohibits recognition of a tax [benefit](https://asc.understandingaccounting.org/glossary/b/#benefit "See Tax (or Benefit).") for tax deductions or favorable tax rates attributable to future dividends of undistributed earnings for which a deferred tax liability has not been recognized, favorable tax treatment would be reflected in measuring that unrecognized deferred tax liability for disclosure purposes. 4. d The amount of the deferred tax liability for temporary differences other than those in (c) (that is, undistributed domestic earnings) that is not recognized in accordance with the provisions of paragraph [740-30-25-18](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-18). Transition date:(P) December 16, 2024; (N) December 16, 2025Transition guidance: [740-10-65-9](https://asc.understandingaccounting.org/asc/740/10/#740-10-65-9) The following information shall be disclosed whenever a [deferred tax liability](https://asc.understandingaccounting.org/glossary/d/#deferred-tax-liability "The deferred tax consequences attributable to taxable temporary differences. A deferred tax liability is measured using the applicable enacted tax rate and provisions of the enacted tax law.") is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures: 1. a A description of the types of temporary differences for which a deferred tax liability has not been recognized and the types of events that would cause those temporary differences to become taxable 2. b [Subparagraph superseded by Accounting Standards Update No. 2023-09](https://asc.understandingaccounting.org/updates/asu-2023-09/). 3. c The amount of the unrecognized deferred tax liability for [temporary differences](https://asc.understandingaccounting.org/glossary/t/#temporary-difference "A difference between the tax basis of an asset or liability computed pursuant to the requirements in Subtopic 740-10 for tax positions, and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively. Paragraph 740-10-25-20 cites examples of temporary differences. Some temporary differences cannot be identified with a particular asset or liability for financial reporting (see paragraphs 740-10-05-10 and 740-10-25-24740-10-25-25), but those temporary differences do meet both of the following conditions: Result from events that have been recognized in the financial statements Will result in taxable or deductible amounts in future years based on provisions of the tax law. Some events recognized in financial statements do not have tax consequences. Certain revenues are exempt from taxation and certain expenses are not deductible. Events that do not have tax consequences do not give rise to temporary differences.") related to investments in foreign subsidiaries and foreign corporate joint ventures that are essentially permanent in duration if determination of that liability is practicable or a statement that determination is not practicable. While paragraph [740-30-25-14](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-14) prohibits recognition of a tax [benefit](https://asc.understandingaccounting.org/glossary/b/#benefit "See Tax (or Benefit).") for tax deductions or favorable tax rates attributable to future dividends of undistributed earnings for which a deferred tax liability has not been recognized, favorable tax treatment would be reflected in measuring that unrecognized deferred tax liability for disclosure purposes. 4. d The amount of the deferred tax liability for temporary differences other than those in (c) (that is, undistributed domestic earnings) that is not recognized in accordance with the provisions of paragraph [740-30-25-18](https://asc.understandingaccounting.org/asc/740/30/#740-30-25-18). Source downloaded (UTC): 2026-09-10T01:18:02.058Z to 2026-09-10T01:18:02.058Z Record version: sha256:521d38d31f50c37e748169ec689d5863d804c65779375e7fa04cbcbb98cd6c5a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-30-60: 60 Relationships [Read section](https://asc.understandingaccounting.org/asc/740/30/#60-relationships) SEC content: no #### Financial Services—Depository and Lending ##### [740-30-60-1](https://asc.understandingaccounting.org/asc/740/30/#740-30-60-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:18:02.058Z to 2026-09-10T01:18:02.058Z Record version: sha256:b4c171dc66c0f7748d26c5a11e90b98234dae2c4ef2017f0576727c36e92201c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For guidance on the tax consequences of bad debt reserves of savings and loans (and other qualified thrift lenders) that arose in tax years beginning before December 31, 1987, see Subtopic 942-740 on financial services—depository and lending—income taxes.