Designed for bankers seeking to gain an understanding of accounting for Federal Income Taxes as required under U.S. GAAP. This series will provide the participant with an overview of the requirements under Accounting Standards Codification (ASC) No 740, Income Taxes, and the practical application to a bank’s financial statements. Exercises and exhibits illustrating common bank current and deferred tax accounting journal entries and period-end balances will be provided.
Specific discussions and accounting examples for transactions and activities will be covered as described below.
Accounting for Income Taxes – Part 1
April 3, 2024 | 1:30 pm – 3:30 pm CDT
What You’ll Learn
- The math and formula behind the proper accrual for income tax expense or benefit
- The reconciliation of book net income (loss) to taxable net income (loss)
- Understanding permanent vs temporary differences between book net income (loss) and taxable net income (loss)
- The concept of recognition and measurement under U.S. GAAP
- Deferred tax assets vs deferred tax liabilities
- Current tax assets vs current tax liabilities
- The accounting equation for income taxes illustrated as a 3-legged stool
- Accounting for net operating tax losses (NOLs)
- The difference between the statutory tax rate and a bank’s effective tax rate
- Illustrations of a book to tax reconciliation and the key role permanent differences have in that equation
- Illustrations related to the accounting for temporary (or timing) book vs tax differences that originate from fixed asset depreciation.
Accounting for Income Taxes – Part 2
April 4, 2024 | 1:30 pm – 3:30 pm CDT
What You’ll Learn
- Illustrations related to the accounting for temporary (or timing) book vs tax differences that originate from the allowance for credit losses, share-based compensation, OREO activities, loan origination fees and costs, and non-performing loans
- The purpose of a valuation allowance recorded against a NOL asset or deferred tax asset
- The concept of windfall tax benefits originating from share based compensation arrangements
- Illustrations on booking, amortizing, and the tax effects on goodwill and core deposit intangibles resulting from a business combination
- The appropriate accounting for taxes between a bank and its holding company and the requirements of a tax sharing agreement.
Who Should Attend
The course is designed for those who understand the basis of bank accounting and desire to have a deeper understanding of the concepts behind accounting for federal income taxes as required under U.S. GAAP. Participants will find this course provides a simplified approach to understanding the accrual and accounting requirements for current and deferred income taxes.