# ASC 740-852-55: Income Taxes — Reorganizations — 55 Implementation Guidance and Illustrations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/740/852/#55-implementation-guidance-and-illustrations) 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): 2026-09-10T01:19:30.735Z to 2026-09-10T01:19:30.735Z Record version: sha256:ea870a69c05bcde6c966b0f5ddb47861a0b4a419af14b49bf14905e8f7b4df0d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-852-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/740/852/#55-implementation-guidance-and-illustrations) SEC content: no #### Implementation Guidance ##### [740-852-55-1](https://asc.understandingaccounting.org/asc/740/852/#740-852-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:30.735Z to 2026-09-10T01:19:30.735Z Record version: sha256:05016c1d96bc2055358f17b57c783dec4174e2decaaa66751fdd8b5fe7a8b954 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section is an integral part of the requirements of this Subtopic. This Section provides implementation guidance that addresses the application of requirements to specific aspects of income tax accounting for quasi-reorganizations. ##### [740-852-55-2](https://asc.understandingaccounting.org/asc/740/852/#740-852-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:30.735Z to 2026-09-10T01:19:30.735Z Record version: sha256:6f2f0e28992c9bd02d1888f32534fdeaf3071050b418336f31e3b4a5dd04e218 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As required by paragraph [852-740-45-3](https://asc.understandingaccounting.org/asc/740/852/#740-852-45-3), unrecognized tax benefits of [deductible temporary differences](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.") and [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.") that existed at the date of a quasi-reorganization shall be reported as a direct addition to contributed capital when recognized after the date of the quasi-reorganization. ##### [740-852-55-3](https://asc.understandingaccounting.org/asc/740/852/#740-852-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:30.735Z to 2026-09-10T01:19:30.735Z Record version: sha256:19e54f6739b8bf97fc09a5f487b16b00f2f9c27a784f560fd95bf06d68ee7e4b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, assume an entity charged losses directly to contributed capital at the date of a quasi-reorganization. At that date, the deferred tax asset for the entity's deductible temporary differences and carryforwards was offset by a valuation allowance. Part of those deductible temporary differences and carryforwards related to losses that were included in determining income in prior years. The remainder were attributable to losses that were charged directly to contributed capital as a result of the quasi-reorganization. When recognized (by reducing or eliminating the valuation allowance) after the date of the quasi-reorganization, the tax benefit of such deductible temporary differences and carryforwards would be reported as a direct addition to contributed capital under the guidance in the preceding paragraph. ##### [740-852-55-4](https://asc.understandingaccounting.org/asc/740/852/#740-852-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:30.735Z to 2026-09-10T01:19:30.735Z Record version: sha256:c39706f1d24a3147a405d533814c1f73bd847166b64c192d94493e37278d0108 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [852-20-25-5](https://asc.understandingaccounting.org/asc/852/20/#852-20-25-5), after a quasi-reorganization, the entity's accounting shall be substantially similar to that appropriate for a new entity. As such, any subsequently recognized tax benefit of an operating loss or tax credit carryforward that existed at the date of a quasi-reorganization shall not be included in the determination of income of the new entity, regardless of whether losses that gave rise to an operating loss carryforward were charged to income before the quasi-reorganization or directly to contributed capital as part of the quasi-reorganization. A new entity would not have tax benefits attributable to operating losses or tax credits that arose before its organization date. ##### [740-852-55-5](https://asc.understandingaccounting.org/asc/740/852/#740-852-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:30.735Z to 2026-09-10T01:19:30.735Z Record version: sha256:9e186102c32f1a1dcce1d13d7ab913dfb1bb771f5502482552dddca169c4768d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A charge to income should be recorded, however, if after a quasi-reorganization an entity concludes that due to a change in circumstances a valuation allowance should be recognized or increased to reduce the amount of tax benefits that were recognized at the time of the quasi-reorganization. ##### [740-852-55-6](https://asc.understandingaccounting.org/asc/740/852/#740-852-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:30.735Z to 2026-09-10T01:19:30.735Z Record version: sha256:58c384321fc602c3e35823b2617f8fbc403ba45416a4399f47e790a09d8ed066 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The accounting for any subsequently recognized tax benefit of deductible temporary differences and carryforwards that existed at the date of a quasi-reorganization does not change based on whether gains were credited directly to contributed capital or losses were charged directly to contributed capital.