# ASC 740-852: Income Taxes — Reorganizations Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/740/852/) 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): 2026-09-10T01:19:01.911Z to 2026-09-10T01:19:32.521Z Record version: sha256:f86b476bda7486889c6b4ac9514b8e2bb4ab495a79105ab0f1a0c639d0e0cff7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-852: Income Taxes — Reorganizations ### Machine-generated study aids ```json { "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" ] } ``` Source downloaded (UTC): 2026-09-10T01:19:01.911Z to 2026-09-10T01:19:01.911Z Record version: sha256:b7f03c6f8abb0c3bb1627a7d4c5e2306d120261d2e546619f21c7deae6b2d24d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-852-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/740/852/#00-status) SEC content: no ##### [740-852-00-1](https://asc.understandingaccounting.org/asc/740/852/#740-852-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:01.911Z to 2026-09-10T01:19:01.911Z Record version: sha256:b54824ce0a49806d4d886f05518a7ff87079bfbcc77492469787659ac1dc0531 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
Temporary DifferenceAmendedAccounting Standards Update No. 2016-1610/24/2016
852-740-45-2SupersededAccounting Standards Update No. 2010-0802/02/2010
852-740-45-3AmendedAccounting Standards Update No. 2016-1912/14/2016
852-740-65-1AddedAccounting Standards Update No. 2010-0802/02/2010
Source downloaded (UTC): 2026-09-10T01:19:04.485Z to 2026-09-10T01:19:04.485Z Record version: sha256:0d5be85bd20ac56cf6529c7afdf1b8f4dc1d07c69106944c922effc981182571 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-852-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/740/852/#05-overview-and-background) SEC content: no ##### [740-852-05-1](https://asc.understandingaccounting.org/asc/740/852/#740-852-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:04.485Z to 2026-09-10T01:19:04.485Z Record version: sha256:28202d94f58d8fea840c454850f3df47b90b2498af2c1012f0d8223f261bf982 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides incremental guidance on accounting for [income taxes](https://asc.understandingaccounting.org/glossary/i/#income-taxes "Domestic and foreign federal (national), state, and local (including franchise) taxes based on income.") if an entity: 1. a Has filed a [petition](https://asc.understandingaccounting.org/glossary/p/#petition "A document filed in a court of bankruptcy, initiating proceedings under the Bankruptcy Code.") with the [Bankruptcy Court](https://asc.understandingaccounting.org/glossary/b/#bankruptcy-court "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.") and expects to reorganize as a going concern under [Chapter 11](https://asc.understandingaccounting.org/glossary/c/#chapter-11 "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.") of the [Bankruptcy Code](https://asc.understandingaccounting.org/glossary/b/#bankruptcy-code "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.") and qualifies for fresh-start reporting under paragraph [852-10-45-19](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-19) 2. b Has undertaken a corporate readjustment procedure known as a quasi-reorganization. Source downloaded (UTC): 2026-09-10T01:19:21.134Z to 2026-09-10T01:19:21.134Z Record version: sha256:78833dd2996ed628b96d2bacc8a3d08001765aef5f219448dd5e17912b474d1b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-852-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/740/852/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [740-852-15-1](https://asc.understandingaccounting.org/asc/740/852/#740-852-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:21.134Z to 2026-09-10T01:19:21.134Z Record version: sha256:165acdcf95825b94b4810368451303b6d4bd2a40ee7aaa8099e3229cc3cd5d15 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Subtopic on fresh-start reporting in a [Chapter 11](https://asc.understandingaccounting.org/glossary/c/#chapter-11 "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.") reorganization follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 852-10-15, except that an entity must also meet the paragraph [852-10-45-19](https://asc.understandingaccounting.org/asc/852/10/#852-10-45-19) requirements for fresh-start reporting. ##### [740-852-15-2](https://asc.understandingaccounting.org/asc/740/852/#740-852-15-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:21.134Z to 2026-09-10T01:19:21.134Z Record version: sha256:f86c26e8a4ab3861fdc01d21573b28233c5792014c7667b42a328f59c1528431 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. Source downloaded (UTC): 2026-09-10T01:19:28.542Z to 2026-09-10T01:19:28.542Z Record version: sha256:35b4dd4b5968d1618264ff8c488d9ed75144db25eacabb196ea0f12f6cb6abeb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-852-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/740/852/#45-other-presentation-matters) SEC content: no #### Fresh-Start Reporting in a Chapter 11 Reorganization ##### [740-852-45-1](https://asc.understandingaccounting.org/asc/740/852/#740-852-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:28.542Z to 2026-09-10T01:19:28.542Z Record version: sha256:4e43f30ff502134c54c64d3d6c38ee3295def1c0fae79c2aa0154c48695b9a2f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For entities that meet the paragraph [852-10-45-19](https://asc.understandingaccounting.org/asc/852/10/#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 plan confirmation date, initial recognition (that is, by elimination of the valuation allowance) of tax benefits realized from preconfirmation net operating loss [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.") and deductible temporary differences shall be reported as a reduction to income tax expense. ##### [740-852-45-2](https://asc.understandingaccounting.org/asc/740/852/#740-852-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:28.542Z to 2026-09-10T01:19:28.542Z Record version: sha256:8044c6366394d816f36885b5ff3db35bdb214a04cd10a8b98abdcf8a750bff1a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2010-08](https://asc.understandingaccounting.org/updates/asu-2010-08/). #### Quasi-Reorganizations ##### [740-852-45-3](https://asc.understandingaccounting.org/asc/740/852/#740-852-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:28.542Z to 2026-09-10T01:19:28.542Z Record version: sha256:faf25615e659cace9df10ab7cd19658a034d491e890891b88ff0e0f5ef391c19 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 if the tax benefits are recognized in subsequent years. ##### [740-852-45-4](https://asc.understandingaccounting.org/asc/740/852/#740-852-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:28.542Z to 2026-09-10T01:19:28.542Z Record version: sha256:75934f93ea30531bb929814ef0708f746ddbd6400fb956fce0bcb95711a21f06 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Section 852-740-55 for implementation guidance related to quasi-reorganizations. 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. Source downloaded (UTC): 2026-09-10T01:19:32.521Z to 2026-09-10T01:19:32.521Z Record version: sha256:4fca55cdd53bd4c98937c015bd3c7b6149c09fb2ac06d8310cb2f2ce1f822412 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-852-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/740/852/#65-transition-and-open-effective-date-information) SEC content: no ##### [740-852-65-1](https://asc.understandingaccounting.org/asc/740/852/#740-852-65-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:19:32.521Z to 2026-09-10T01:19:32.521Z Record version: sha256:459af264e62fe0daba1da513bf96260685786006a61e49fb71a8741adfaf0faf Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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_.