# ASC 740-944: Income Taxes — Financial Services—Insurance Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/740/944/) 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): 2026-09-10T01:20:36.911Z to 2026-09-10T01:20:53.539Z Record version: sha256:a8706060a49d6f48c46582e88e375a844a6458be3056a94170c57c18c8abaf42 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-944: Income Taxes — Financial Services—Insurance ### Machine-generated study aids ```json { "summary": "This Subtopic applies Topic 740's income tax model to insurance entities. Deferred tax liabilities and assets are recognized for temporary differences generally, but a life insurance entity does not provide deferred taxes on taxable temporary differences related to policyholders' surplus arising in fiscal years beginning on or before December 15, 1992 — unless a known or expected reduction in that surplus makes tax payment likely, in which case the attributable tax is accrued currently. Disclosure of unrecognized deferred tax liabilities under the Topic 740 exceptions is required.", "key_points": [ "Except as otherwise provided, a deferred tax liability or asset shall be recognized for the deferred tax consequences of temporary differences in accordance with Topic 740 (740-944-25-2).", "A life insurance entity shall not provide deferred taxes on taxable temporary differences related to policyholders' surplus that arose in fiscal years beginning on or before December 15, 1992 (740-944-25-3).", "If circumstances indicate the insurer is likely to pay income taxes currently or later because of a known or expected reduction in policyholders' surplus, the income taxes attributable to that reduction shall be accrued as tax expense of the current period (740-944-25-3).", "A dividend recognized under 944-50-25-3 is treated as a planned contractual benefit in computing GAAP liabilities, but its amount may need to be identified to compute deferred taxes where the dividend provision plus dividends paid or declared may exceed the federally deductible amount (740-944-25-1).", "When a deferred tax liability is not recognized under the exceptions in Section 740-10-25, the entity must disclose the types of temporary differences and events that would make them taxable, the cumulative amount of each type, and the unrecognized deferred tax liability for differences other than policyholders' surplus (740-944-50-1).", "The Subtopic follows the scope and scope exceptions of Section 944-10-15 (740-944-15-1)." ], "categories": [ "Income taxes", "Industry-specific", "Recognition", "Disclosure" ], "audience_level": "advanced", "student_note": "The exam trap is the grandfathered policyholders' surplus exception: no deferred tax is recorded on pre-December 16, 1992 policyholders' surplus differences, yet tax must be accrued currently once a reduction in that surplus is known or expected. Note also that this unrecognized amount is expressly excluded from the quantitative disclosure in 740-944-50-1(c).", "related_topics": [ "740-10", "944-10", "944-50", "944-40" ], "key_concepts": [ "policyholders' surplus", "temporary differences", "deferred tax liability", "exceptions to comprehensive recognition", "life insurance entity", "policyholder dividends", "planned contractual benefit" ] } ``` Source downloaded (UTC): 2026-09-10T01:20:36.911Z to 2026-09-10T01:20:36.911Z Record version: sha256:47bcb0534e92ac35b2353312264e8a1ee17a61031cd7a065b169b4e8478ec25b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-944-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/740/944/#00-status) SEC content: no ##### [740-944-00-1](https://asc.understandingaccounting.org/asc/740/944/#740-944-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:20:36.911Z to 2026-09-10T01:20:36.911Z Record version: sha256:370a307604d3f035f19c76fa1ff66ce8a1f8e459fd659eb867aec1ea86c62849 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
944-740-25-3AmendedAccounting Standards Update No. 2015-0101/09/2015
Source downloaded (UTC): 2026-09-10T01:20:38.859Z to 2026-09-10T01:20:38.859Z Record version: sha256:2778c7b097f810c3c449bcd4879e830eacbceff21b1c93d1674f522182eef66b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-944-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/740/944/#05-overview-and-background) SEC content: no ##### [740-944-05-1](https://asc.understandingaccounting.org/asc/740/944/#740-944-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:20:38.859Z to 2026-09-10T01:20:38.859Z Record version: sha256:86de584e94e45c6b71b770806e2ee3ad2e5c4ff59eeb80da53283dc7c8363b79 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to insurance entities on accounting for and financial reporting of income taxes. Source downloaded (UTC): 2026-09-10T01:20:41.241Z to 2026-09-10T01:20:41.241Z Record version: sha256:7b845cb66c506053d9c50df99123bacedf9ceed03572b6b2dc00b62bf4e5c3b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-944-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/740/944/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [740-944-15-1](https://asc.understandingaccounting.org/asc/740/944/#740-944-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:20:41.241Z to 2026-09-10T01:20:41.241Z Record version: sha256:addaa788a7d2b2ce2e95586751e547c985762b29fe50542eae2921c14699e4b7 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 944-10-15. Source downloaded (UTC): 2026-09-10T01:20:47.794Z to 2026-09-10T01:20:47.794Z Record version: sha256:73f173266f83075a00fd49a25952188172100e575de3927f29676a82585c324b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-944-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/740/944/#25-recognition) SEC content: no #### Policyholder Dividends ##### [740-944-25-1](https://asc.understandingaccounting.org/asc/740/944/#740-944-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:20:47.794Z to 2026-09-10T01:20:47.794Z Record version: sha256:4afa23419ddda823c781b45b71cc92795e5c70452d28add4b07c264388e50ff9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although payment is not required, a dividend recognized under paragraph [944-50-25-3](https://asc.understandingaccounting.org/asc/944/50/#944-50-25-3) is considered a planned contractual benefit in computing liabilities under generally accepted accounting principles (GAAP). However, it may be necessary to identify the amount of this dividend to calculate deferred income taxes in those cases in which there is a question as to whether the dividend provision in the liabilities, together with the dividends paid or declared, may exceed the amount of dividends otherwise deductible for federal income tax purposes. #### Policyholders' Surplus ##### [740-944-25-2](https://asc.understandingaccounting.org/asc/740/944/#740-944-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:20:47.794Z to 2026-09-10T01:20:47.794Z Record version: sha256:9b4564415ecc37113331c43c8edaf585d7346c8c47daf88a4a14901d03bb8358 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Except as noted in the following paragraph, a deferred tax liability or asset shall be recognized for the deferred tax consequences of temporary differences in accordance with Topic 740. ##### [740-944-25-3](https://asc.understandingaccounting.org/asc/740/944/#740-944-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:20:47.794Z to 2026-09-10T01:20:47.794Z Record version: sha256:c9db4cbeee1f4af45e14df12edcce392a60da087093e95e800ecb93729e073ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As described in Topic 740, a [life insurance entity](https://asc.understandingaccounting.org/glossary/l/#life-insurance-entity "An entity that can issue annuity, endowment, and accident and health insurance contracts as well as life insurance contracts. Life insurance entities may be either stock or mutual entities.") shall not provide deferred taxes on taxable temporary differences related to policyholders' surplus that arose in fiscal years beginning on or before December 15, 1992. However, if circumstances indicate that the insurance entity is likely to pay income taxes, either currently or in later years, because of a known or expected reduction in policyholders' surplus, income taxes attributable to that reduction shall be accrued as a tax expense of the current period. Source downloaded (UTC): 2026-09-10T01:20:50.151Z to 2026-09-10T01:20:50.151Z Record version: sha256:fac8e888386cbc53c716b2b29693d544bf0719cf67ec73bcd17ea2121bc7d239 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-944-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/740/944/#50-disclosure) SEC content: no ##### [740-944-50-1](https://asc.understandingaccounting.org/asc/740/944/#740-944-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:20:50.151Z to 2026-09-10T01:20:50.151Z Record version: sha256:6a14e62db2072998afc5bf7310277ef5fc9215a54a593bc17bb569ec6e320e45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following information shall be disclosed if a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes for any of the areas addressed by Section 740-10-25: 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 3. c The amount of the deferred tax liability for temporary differences other than the policyholders' surplus of a [life insurance entity](https://asc.understandingaccounting.org/glossary/l/#life-insurance-entity "An entity that can issue annuity, endowment, and accident and health insurance contracts as well as life insurance contracts. Life insurance entities may be either stock or mutual entities.") that is not recognized in accordance with the provisions of paragraph [740-10-25-3](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-3).