# ASC 740-946-55: Income Taxes — Financial Services—Investment Companies — 55 Implementation Guidance and Illustrations

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/740/946/#55-implementation-guidance-and-illustrations)

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## ASC 740-946-55: 55 Implementation Guidance and Illustrations

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#### Implementation Guidance

##### [740-946-55-1](https://asc.understandingaccounting.org/asc/740/946/#740-946-55-1)

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Regulated investment companies may have realized net capital and foreign currency gains during the period from the beginning of their current taxable year through October 31, which they are required to distribute to avoid federal excise tax. If those regulated investment companies then incur net capital or currency losses from November 1 to the close of their taxable year, their Form 1120-RIC tax returns would indicate that they had made distributions during the taxable year in excess of taxable gains (that is, returns of capital), even though the distributions were properly paid from gains at the time of the excise-tax distribution. To avoid this result, federal income tax regulations permit such post-October losses to be deferred and recognized on the Form 1120-RIC tax return of the next succeeding taxable year.

##### [740-946-55-2](https://asc.understandingaccounting.org/asc/740/946/#740-946-55-2)

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Paragraph [740-10-50-6](https://asc.understandingaccounting.org/asc/740/10/#740-10-50-6) requires that a public entity disclose the approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets (before allocation of valuation allowances). The amounts and expiration dates of capital loss carryforwards and the amounts of any post-October capital and currency loss deferrals should be considered when an entity applies that paragraph.