{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/740/852/","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","number":"740-852","topic":"740","title":"Reorganizations","area":"Expenses","paragraphs":15,"summary":"ASC 740-852 gives incremental income tax guidance for entities emerging from Chapter 11 that qualify for fresh-start reporting and for entities that effect a quasi-reorganization. Under fresh-start reporting, deferred taxes follow ordinary GAAP, and tax benefits of preconfirmation NOL carryforwards and deductible temporary differences recognized later (by releasing the valuation allowance) reduce income tax expense. After a quasi-reorganization, by contrast, subsequently recognized tax benefits of deductible temporary differences and carryforwards that existed at the quasi-reorganization date are credited directly to contributed capital, not income.","concepts":["fresh-start reporting","quasi-reorganization","valuation allowance","net operating loss carryforward","deductible temporary differences","contributed capital","plan confirmation date","deferred tax asset"],"categories":["Income taxes","Debt and equity","Presentation","Industry-specific"],"level":"intermediate","topic_title":"Income Taxes","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"740-852-00-1","para":"00-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following table identifies the changes made to this Subtopic.</div><div class=\"norm-text\"><table class=\"asc-table\" id=\"SL6832253-128549\"><tr><td class=\"entry\"><strong class=\"ph b\">Paragraph</strong></td><td class=\"entry\"><strong class=\"ph b\">Action</strong></td><td class=\"entry\"><strong class=\"ph b\">Accounting Standards Update</strong></td><td class=\"entry\"><strong class=\"ph b\">Date</strong></td></tr><tr><td class=\"entry\"></td><td class=\"entry\"></td><td class=\"entry\"></td><td class=\"entry\"></td></tr><tr><td class=\"entry\"><a href=\"/glossary/t/#temporary-difference\" class=\"term\" title=\"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.\"><span>Temporary Difference</span></a></td><td class=\"entry\">Amended</td><td class=\"entry\"><a href=\"/updates/asu-2016-16/\" class=\"xref\">Accounting Standards Update No. 2016-16</a></td><td class=\"entry\">10/24/2016</td></tr><tr><td class=\"entry\"></td><td class=\"entry\"></td><td class=\"entry\"></td><td class=\"entry\"></td></tr><tr><td class=\"entry\"><a href=\"/asc/740/852/#740-852-45-2\" class=\"xref\">852-740-45-2</a></td><td class=\"entry\">Superseded</td><td class=\"entry\"><a href=\"/updates/asu-2010-08/\" class=\"xref\">Accounting Standards Update No. 2010-08</a></td><td class=\"entry\">02/02/2010</td></tr><tr><td class=\"entry\"><a href=\"/asc/740/852/#740-852-45-3\" class=\"xref\">852-740-45-3</a></td><td class=\"entry\">Amended</td><td class=\"entry\"><a href=\"/updates/asu-2016-19/\" class=\"xref\">Accounting Standards Update No. 2016-19</a></td><td class=\"entry\">12/14/2016</td></tr><tr><td class=\"entry\"><a href=\"/asc/740/852/#740-852-65-1\" class=\"xref\">852-740-65-1</a></td><td class=\"entry\">Added</td><td class=\"entry\"><a href=\"/updates/asu-2010-08/\" class=\"xref\">Accounting Standards Update No. 2010-08</a></td><td class=\"entry\">02/02/2010</td></tr></table></div></div>","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nTemporary Difference | Amended | Accounting Standards Update No. 2016-16 | 10/24/2016 |\n…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b54824ce0a49806d4d886f05518a7ff87079bfbcc77492469787659ac1dc0531","downloaded_from":"2026-09-10T01:19:01.911Z","last_downloaded_at":"2026-09-10T01:19:01.911Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477682","source_sha256":"3554af429fcb975606b3a095b772363007c048ca7910ae6b3ca0d1f9e63a166f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:403d96e86e536ccb401658efc9e5272d9b1fea46246d01ec939013e268bd4acc","downloaded_from":"2026-09-10T01:19:01.911Z","last_downloaded_at":"2026-09-10T01:19:01.911Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477682","source_sha256":"3554af429fcb975606b3a095b772363007c048ca7910ae6b3ca0d1f9e63a166f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b7f03c6f8abb0c3bb1627a7d4c5e2306d120261d2e546619f21c7deae6b2d24d","downloaded_from":"2026-09-10T01:19:01.911Z","last_downloaded_at":"2026-09-10T01:19:01.911Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477682","source_sha256":"3554af429fcb975606b3a095b772363007c048ca7910ae6b3ca0d1f9e63a166f"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"740-852-05-1","para":"05-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">This Subtopic provides incremental guidance on accounting for <a href=\"/glossary/i/#income-taxes\" class=\"term\" title=\"Domestic and foreign federal (national), state, and local (including franchise) taxes based on income.\"><span>income taxes</span></a> if an entity: <ol class=\"ol-norm\"><li class=\"li-norm\"><span class=\"linum\">a</span><div class=\"p\">Has filed a <a href=\"/glossary/p/#petition\" class=\"term\" title=\"A document filed in a court of bankruptcy, initiating proceedings under the Bankruptcy Code.\"><span>petition</span></a> with the <a href=\"/glossary/b/#bankruptcy-court\" class=\"term\" title=\"The United States Bankruptcy Court is an adjunct of the United States District Courts. Under the jurisdiction of the District Court, the Bankruptcy Court is generally responsible for cases filed under Chapters 7, 11, 12, and 13 of the Bankruptcy Code.\"><span>Bankruptcy Court</span></a> and expects to reorganize as a going concern under <a href=\"/glossary/c/#chapter-11\" class=\"term\" title=\"A reorganization action, either voluntarily or involuntarily initiated under the provisions of the Bankruptcy Code, that provides for a reorganization of the debt and equity structure of the business and allows the business to continue operations. A debtor may also file a plan of liquidation under Chapter 11.\"><span>Chapter 11</span></a> of the <a href=\"/glossary/b/#bankruptcy-code\" class=\"term\" title=\"A federal statute, enacted October 1, 1979, as title 11 of the United States Code by the Bankruptcy Reform Act of 1978, that applies to all cases filed on or after its enactment and that provides the basis for the current federal bankruptcy system.\"><span>Bankruptcy Code</span></a> and qualifies for fresh-start reporting under paragraph <a href=\"/asc/852/10/#852-10-45-19\" class=\"xref\">852-10-45-19</a></div></li><li class=\"li-norm\"><span class=\"linum\">b</span><div class=\"p\">Has undertaken a corporate readjustment procedure known as a quasi-reorganization.</div></li></ol></div></div>","snippet":"This Subtopic provides incremental guidance on accounting for income taxes if an entity:\n(a) Has filed a petition with the Bankruptcy Court and expects to reorganize as a going concern under Chapter 11 of the Bankruptcy …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:28202d94f58d8fea840c454850f3df47b90b2498af2c1012f0d8223f261bf982","downloaded_from":"2026-09-10T01:19:04.485Z","last_downloaded_at":"2026-09-10T01:19:04.485Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479237","source_sha256":"bdae0780b5b44475df9e10c5731acbff92c7e470bbd012e348ccdaef65f6ee1c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:190e3af91162888381547d52fa4b6171299aa86e81cbe11283daf0828bb1de4e","downloaded_from":"2026-09-10T01:19:04.485Z","last_downloaded_at":"2026-09-10T01:19:04.485Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479237","source_sha256":"bdae0780b5b44475df9e10c5731acbff92c7e470bbd012e348ccdaef65f6ee1c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0d5be85bd20ac56cf6529c7afdf1b8f4dc1d07c69106944c922effc981182571","downloaded_from":"2026-09-10T01:19:04.485Z","last_downloaded_at":"2026-09-10T01:19:04.485Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479237","source_sha256":"bdae0780b5b44475df9e10c5731acbff92c7e470bbd012e348ccdaef65f6ee1c"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":"Overall Guidance","paragraphs":[{"citation":"740-852-15-1","para":"15-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">The guidance in this Subtopic on fresh-start reporting in a <a href=\"/glossary/c/#chapter-11\" class=\"term\" title=\"A reorganization action, either voluntarily or involuntarily initiated under the provisions of the Bankruptcy Code, that provides for a reorganization of the debt and equity structure of the business and allows the business to continue operations. A debtor may also file a plan of liquidation under Chapter 11.\"><span>Chapter 11</span></a> reorganization follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section <a altsource=\"GUID-24CE2CBC-A6F5-4673-8A41-3ABF7765450A.ditamap\" class=\"ditamap\">852-10-15</a>, except that an entity must also meet the paragraph <a href=\"/asc/852/10/#852-10-45-19\" class=\"xref\">852-10-45-19</a> requirements for fresh-start reporting.</div></div>","snippet":"The guidance in this Subtopic on fresh-start reporting in a Chapter 11 reorganization follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 852-10-15, except that an entity must als…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:165acdcf95825b94b4810368451303b6d4bd2a40ee7aaa8099e3229cc3cd5d15","downloaded_from":"2026-09-10T01:19:21.134Z","last_downloaded_at":"2026-09-10T01:19:21.134Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477781","source_sha256":"b7abe7601c5c0050f4a4c9fe985edb4bb2593feefbeb1ac8d1383e0dd4303903"}},{"citation":"740-852-15-2","para":"15-2","html":"<div class=\"asc-body\"><div class=\"norm-text\">The guidance in this Subtopic on quasi-reorganizations follows the same Scope and Scope Exceptions as outlined in Subtopic <a altsource=\"GUID-270E413C-5468-4ADC-BA55-11434A96FBB2.ditamap\" class=\"ditamap\">852-20</a>, see Section <a altsource=\"GUID-EAEF1683-E51C-4D95-AD65-DF1B5BDA0DB5.ditamap\" class=\"ditamap\">852-20-15</a>.</div></div>","snippet":"The guidance in this Subtopic on quasi-reorganizations follows the same Scope and Scope Exceptions as outlined in Subtopic 852-20, see Section 852-20-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f86c26e8a4ab3861fdc01d21573b28233c5792014c7667b42a328f59c1528431","downloaded_from":"2026-09-10T01:19:21.134Z","last_downloaded_at":"2026-09-10T01:19:21.134Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477781","source_sha256":"b7abe7601c5c0050f4a4c9fe985edb4bb2593feefbeb1ac8d1383e0dd4303903"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8e1d1983c232a491fdc141385edb288597d674fdceacb01e6fab9d492abd3636","downloaded_from":"2026-09-10T01:19:21.134Z","last_downloaded_at":"2026-09-10T01:19:21.134Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477781","source_sha256":"b7abe7601c5c0050f4a4c9fe985edb4bb2593feefbeb1ac8d1383e0dd4303903"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:78833dd2996ed628b96d2bacc8a3d08001765aef5f219448dd5e17912b474d1b","downloaded_from":"2026-09-10T01:19:21.134Z","last_downloaded_at":"2026-09-10T01:19:21.134Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477781","source_sha256":"b7abe7601c5c0050f4a4c9fe985edb4bb2593feefbeb1ac8d1383e0dd4303903"}},{"number":"45","label":"45 Other Presentation Matters","anchor":"45-other-presentation-matters","is_sec":false,"groups":[{"block":null,"heading":"Fresh-Start Reporting in a Chapter 11 Reorganization","paragraphs":[{"citation":"740-852-45-1","para":"45-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_EDECB3CD-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">For entities that meet the paragraph <a href=\"/asc/852/10/#852-10-45-19\" class=\"xref\">852-10-45-19</a> requirements for fresh-start reporting, deferred taxes shall be reported in conformity with generally accepted accounting principles (GAAP). If not recognizable at the plan confirmation date, initial recognition (that is, by elimination of the valuation allowance) of tax benefits realized from preconfirmation net operating loss <a href=\"/glossary/c/#carryforwards\" class=\"term\" title=\"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.\"><span>carryforwards</span></a> and deductible temporary differences shall be reported as a reduction to income tax expense. </span></span></div></div>","snippet":"For entities that meet the paragraph 852-10-45-19 requirements for fresh-start reporting, deferred taxes shall be reported in conformity with generally accepted accounting principles (GAAP). If not recognizable at the pl…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4e43f30ff502134c54c64d3d6c38ee3295def1c0fae79c2aa0154c48695b9a2f","downloaded_from":"2026-09-10T01:19:28.542Z","last_downloaded_at":"2026-09-10T01:19:28.542Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478029","source_sha256":"59882d9d5be33c3ddeef97592e827e9040d88fbec5dbe4594e175eed1c85f022"}},{"citation":"740-852-45-2","para":"45-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><a href=\"/updates/asu-2010-08/\" class=\"xref\">Paragraph superseded by Accounting Standards Update No. 2010-08</a>.</div></div>","snippet":"Paragraph superseded by Accounting Standards Update No. 2010-08.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8044c6366394d816f36885b5ff3db35bdb214a04cd10a8b98abdcf8a750bff1a","downloaded_from":"2026-09-10T01:19:28.542Z","last_downloaded_at":"2026-09-10T01:19:28.542Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478029","source_sha256":"59882d9d5be33c3ddeef97592e827e9040d88fbec5dbe4594e175eed1c85f022"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:81039bd1b8daf098ea8ef58a1cf8c0f5fdf2ef611d5cd0476ff8cceeac231683","downloaded_from":"2026-09-10T01:19:28.542Z","last_downloaded_at":"2026-09-10T01:19:28.542Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478029","source_sha256":"59882d9d5be33c3ddeef97592e827e9040d88fbec5dbe4594e175eed1c85f022"}},{"block":null,"heading":"Quasi-Reorganizations","paragraphs":[{"citation":"740-852-45-3","para":"45-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_EDECB4E6-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The tax benefits of deductible temporary differences and carryforwards as of the date of a quasi-reorganization as defined and contemplated in Subtopic <a altsource=\"GUID-270E413C-5468-4ADC-BA55-11434A96FBB2.ditamap\" class=\"ditamap\">852-20</a> shall be reported as a direct addition to contributed capital if the tax benefits are recognized in subsequent years. </span></span></div></div>","snippet":"The tax benefits of deductible temporary differences and carryforwards as of the date of a quasi-reorganization as defined and contemplated in Subtopic 852-20 shall be reported as a direct addition to contributed capital…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:faf25615e659cace9df10ab7cd19658a034d491e890891b88ff0e0f5ef391c19","downloaded_from":"2026-09-10T01:19:28.542Z","last_downloaded_at":"2026-09-10T01:19:28.542Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478029","source_sha256":"59882d9d5be33c3ddeef97592e827e9040d88fbec5dbe4594e175eed1c85f022"}},{"citation":"740-852-45-4","para":"45-4","html":"<div class=\"asc-body\"><div class=\"norm-text\">See Section <a altsource=\"GUID-82E2DC56-A378-4BB8-BAFD-7EF69F46217F.ditamap\" class=\"ditamap\">852-740-55</a> for implementation guidance related to quasi-reorganizations.</div></div>","snippet":"See Section 852-740-55 for implementation guidance related to quasi-reorganizations.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:75934f93ea30531bb929814ef0708f746ddbd6400fb956fce0bcb95711a21f06","downloaded_from":"2026-09-10T01:19:28.542Z","last_downloaded_at":"2026-09-10T01:19:28.542Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478029","source_sha256":"59882d9d5be33c3ddeef97592e827e9040d88fbec5dbe4594e175eed1c85f022"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5fe5c274432130f346d54c6b4750d270cea7cc99f186280b48c0f39a0e4a5f8e","downloaded_from":"2026-09-10T01:19:28.542Z","last_downloaded_at":"2026-09-10T01:19:28.542Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478029","source_sha256":"59882d9d5be33c3ddeef97592e827e9040d88fbec5dbe4594e175eed1c85f022"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:35b4dd4b5968d1618264ff8c488d9ed75144db25eacabb196ea0f12f6cb6abeb","downloaded_from":"2026-09-10T01:19:28.542Z","last_downloaded_at":"2026-09-10T01:19:28.542Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478029","source_sha256":"59882d9d5be33c3ddeef97592e827e9040d88fbec5dbe4594e175eed1c85f022"}},{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Implementation Guidance","paragraphs":[{"citation":"740-852-55-1","para":"55-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">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.</div></div>","snippet":"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-r…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:05016c1d96bc2055358f17b57c783dec4174e2decaaa66751fdd8b5fe7a8b954","downloaded_from":"2026-09-10T01:19:30.735Z","last_downloaded_at":"2026-09-10T01:19:30.735Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477649","source_sha256":"cbeaaeae838160cc7a37962c270858a0361b296131f570b572528e0471daaf7f"}},{"citation":"740-852-55-2","para":"55-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_EDF7471C-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">As required by paragraph <a href=\"/asc/740/852/#740-852-45-3\" class=\"xref\">852-740-45-3</a>, unrecognized tax benefits of <a href=\"/glossary/d/#deductible-temporary-difference\" class=\"term\" title=\"Temporary differences that result in deductible amounts in future years when the related asset or liability is recovered or settled, respectively. See Temporary Difference.\"><span>deductible temporary differences</span></a> and <a href=\"/glossary/c/#carryforwards\" class=\"term\" title=\"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.\"><span>carryforwards</span></a> 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. </span></span></div></div>","snippet":"As required by paragraph 852-740-45-3, unrecognized tax benefits of deductible temporary differences and carryforwards that existed at the date of a quasi-reorganization shall be reported as a direct addition to contribu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6f2f0e28992c9bd02d1888f32534fdeaf3071050b418336f31e3b4a5dd04e218","downloaded_from":"2026-09-10T01:19:30.735Z","last_downloaded_at":"2026-09-10T01:19:30.735Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477649","source_sha256":"cbeaaeae838160cc7a37962c270858a0361b296131f570b572528e0471daaf7f"}},{"citation":"740-852-55-3","para":"55-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_EDF7494F-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">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. </span></span></div></div>","snippet":"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…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:19e54f6739b8bf97fc09a5f487b16b00f2f9c27a784f560fd95bf06d68ee7e4b","downloaded_from":"2026-09-10T01:19:30.735Z","last_downloaded_at":"2026-09-10T01:19:30.735Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477649","source_sha256":"cbeaaeae838160cc7a37962c270858a0361b296131f570b572528e0471daaf7f"}},{"citation":"740-852-55-4","para":"55-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_EDF74B29-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">As indicated in paragraph <a href=\"/asc/852/20/#852-20-25-5\" class=\"xref\">852-20-25-5</a>, 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. </span></span></div></div>","snippet":"As indicated in paragraph 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 ope…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c39706f1d24a3147a405d533814c1f73bd847166b64c192d94493e37278d0108","downloaded_from":"2026-09-10T01:19:30.735Z","last_downloaded_at":"2026-09-10T01:19:30.735Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477649","source_sha256":"cbeaaeae838160cc7a37962c270858a0361b296131f570b572528e0471daaf7f"}},{"citation":"740-852-55-5","para":"55-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_EDF74CD1-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">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. </span></span></div></div>","snippet":"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 ta…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9e186102c32f1a1dcce1d13d7ab913dfb1bb771f5502482552dddca169c4768d","downloaded_from":"2026-09-10T01:19:30.735Z","last_downloaded_at":"2026-09-10T01:19:30.735Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477649","source_sha256":"cbeaaeae838160cc7a37962c270858a0361b296131f570b572528e0471daaf7f"}},{"citation":"740-852-55-6","para":"55-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_EDF74E39-6E92-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">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. </span></span></div></div>","snippet":"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 dir…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:58c384321fc602c3e35823b2617f8fbc403ba45416a4399f47e790a09d8ed066","downloaded_from":"2026-09-10T01:19:30.735Z","last_downloaded_at":"2026-09-10T01:19:30.735Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477649","source_sha256":"cbeaaeae838160cc7a37962c270858a0361b296131f570b572528e0471daaf7f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b592fe7e9733bc07077209cea44c1df6c5a25a5d8500e2c26c13a339c6e6751","downloaded_from":"2026-09-10T01:19:30.735Z","last_downloaded_at":"2026-09-10T01:19:30.735Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477649","source_sha256":"cbeaaeae838160cc7a37962c270858a0361b296131f570b572528e0471daaf7f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ea870a69c05bcde6c966b0f5ddb47861a0b4a419af14b49bf14905e8f7b4df0d","downloaded_from":"2026-09-10T01:19:30.735Z","last_downloaded_at":"2026-09-10T01:19:30.735Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477649","source_sha256":"cbeaaeae838160cc7a37962c270858a0361b296131f570b572528e0471daaf7f"}},{"number":"65","label":"65 Transition and Open Effective Date Information","anchor":"65-transition-and-open-effective-date-information","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"740-852-65-1","para":"65-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">Paragraph superseded on 07/01/2010 after the end of the transition period stated in Accounting Standards Update No. 2010-08, <em class=\"ph i\">Technical Corrections to Various Topics</em>.</div></div>","snippet":"Paragraph superseded on 07/01/2010 after the end of the transition period stated in Accounting Standards Update No. 2010-08, Technical Corrections to Various Topics.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:459af264e62fe0daba1da513bf96260685786006a61e49fb71a8741adfaf0faf","downloaded_from":"2026-09-10T01:19:32.521Z","last_downloaded_at":"2026-09-10T01:19:32.521Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478159","source_sha256":"bb751ff2abaa2a1f593d85262f3c7f3380242fe7c8cb1be5e75258d3e301c1c8"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:28503994bf0a9e6bdd00dd19887022a8e9a591231f5fa3c7e76c35d1a2ed2e96","downloaded_from":"2026-09-10T01:19:32.521Z","last_downloaded_at":"2026-09-10T01:19:32.521Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478159","source_sha256":"bb751ff2abaa2a1f593d85262f3c7f3380242fe7c8cb1be5e75258d3e301c1c8"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4fca55cdd53bd4c98937c015bd3c7b6149c09fb2ac06d8310cb2f2ce1f822412","downloaded_from":"2026-09-10T01:19:32.521Z","last_downloaded_at":"2026-09-10T01:19:32.521Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478159","source_sha256":"bb751ff2abaa2a1f593d85262f3c7f3380242fe7c8cb1be5e75258d3e301c1c8"}}],"enrichment":{"summary":"ASC 740-852 gives incremental income tax guidance for entities emerging from Chapter 11 that qualify for fresh-start reporting and for entities that effect a quasi-reorganization. Under fresh-start reporting, deferred taxes follow ordinary GAAP, and tax benefits of preconfirmation NOL carryforwards and deductible temporary differences recognized later (by releasing the valuation allowance) reduce income tax expense. After a quasi-reorganization, by contrast, subsequently recognized tax benefits of deductible temporary differences and carryforwards that existed at the quasi-reorganization date are credited directly to contributed capital, not income.","key_points":["The Subtopic applies only to entities that filed a Chapter 11 petition, expect to reorganize as a going concern, and qualify for fresh-start reporting under 852-10-45-19, or that have undertaken a quasi-reorganization (740-852-05-1).","Fresh-start entities report deferred taxes in conformity with GAAP; benefits of preconfirmation NOL carryforwards and deductible temporary differences not recognizable at the plan confirmation date are, when later recognized by eliminating the valuation allowance, reported as a reduction to income tax expense (740-852-45-1).","Tax benefits of deductible temporary differences and carryforwards existing at the date of a quasi-reorganization (Subtopic 852-20) are reported as a direct addition to contributed capital if recognized in subsequent years (740-852-45-3; 852-740-55-2).","Because post-quasi-reorganization accounting is substantially similar to that of a new entity (852-20-25-5), subsequently recognized benefits of preexisting NOL or tax credit carryforwards are excluded from income regardless of whether the underlying losses were charged to income before the quasi-reorganization or directly to contributed capital (740-852-55-4).","If a change in circumstances after a quasi-reorganization requires recognizing or increasing a valuation allowance against tax benefits recognized at the quasi-reorganization date, the resulting adjustment is charged to income (740-852-55-5).","The equity treatment of subsequently recognized tax benefits does not differ based on whether gains were credited or losses were charged directly to contributed capital in the quasi-reorganization (740-852-55-6)."],"categories":["Income taxes","Debt and equity","Presentation","Industry-specific"],"audience_level":"intermediate","student_note":"The exam trap is the asymmetry: post-emergence release of a valuation allowance on preconfirmation attributes reduces income tax expense under fresh-start reporting, but the identical release after a quasi-reorganization is credited directly to contributed capital. Note the one-way street — later increases in the valuation allowance after a quasi-reorganization are charged to income, not equity.","related_topics":["852-10","852-20","740-10","852-740"],"key_concepts":["fresh-start reporting","quasi-reorganization","valuation allowance","net operating loss carryforward","deductible temporary differences","contributed capital","plan confirmation date","deferred tax asset"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f5b454001a35bc87d8750995a0b753f827ac8214996c267c39205b0c70c18bb5","downloaded_from":"2026-09-10T01:19:01.911Z","last_downloaded_at":"2026-09-10T01:19:32.521Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"852-20","title":"Quasi-Reorganizations","topic_title":"Reorganizations","score":0.7772,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:56118d34b61e8526ec02394ee681d7079a4034f49f9cc7c05b961e2c8c0cc97d","downloaded_from":"2026-09-10T02:03:26.455Z","last_downloaded_at":"2026-09-10T02:03:59.595Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"740-10","title":"Overall","topic_title":"Income Taxes","score":0.7321,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:728b8e84d59a045fae1344fe3c373a28e24a7c48c9f875c70f286fd1af9ea23e","downloaded_from":"2026-09-10T01:16:12.781Z","last_downloaded_at":"2026-09-10T01:17:20.090Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"740-830","title":"Foreign Currency Matters","topic_title":"Income Taxes","score":0.6934,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:46d5db18c91b9e2243c13120c4e15c9a990b77a727bfc89338847e9cd0dc11a8","downloaded_from":"2026-09-10T01:18:38.556Z","last_downloaded_at":"2026-09-10T01:19:00.224Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"740-20","title":"Intraperiod Tax Allocation","topic_title":"Income Taxes","score":0.6851,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:10cd7f78229b6d40b4c0ff5a88b6860db418f8c164576477b4760cd1d8fe83e4","downloaded_from":"2026-09-10T01:17:22.686Z","last_downloaded_at":"2026-09-10T01:17:39.374Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"740-980","title":"Regulated Operations","topic_title":"Income Taxes","score":0.6838,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0e7746598a7a18453eabd71b8d45df9e0b17f212ef2cb8d1785debc50388d01c","downloaded_from":"2026-09-10T01:21:36.471Z","last_downloaded_at":"2026-09-10T01:21:55.089Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"852-10","title":"Overall","topic_title":"Reorganizations","score":0.6834,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9ef7e4fd01cb1cfa461b483f0d2e76ab7639e3702fd5e8f1508d8840acfb5d69","downloaded_from":"2026-09-10T02:02:52.609Z","last_downloaded_at":"2026-09-10T02:03:24.197Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"740-830","title":"Foreign Currency Matters","topic_title":"Income Taxes","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:750314b21fa10e1176fcea8e2fb1ca7d6be030745f0520e70386208c1deba50c","downloaded_from":"2026-09-10T01:18:38.556Z","last_downloaded_at":"2026-09-10T01:19:00.224Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"740-924","title":"Entertainment—Casinos","topic_title":"Income Taxes","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:312fd576fa7472a3fbad158c2dc986967428a6495cacca141575df953cf89798","downloaded_from":"2026-09-10T01:19:35.937Z","last_downloaded_at":"2026-09-10T01:19:46.163Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f86b476bda7486889c6b4ac9514b8e2bb4ab495a79105ab0f1a0c639d0e0cff7","downloaded_from":"2026-09-10T01:19:01.911Z","last_downloaded_at":"2026-09-10T01:19:32.521Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}