Sobel & Co. LLC,  accounting firm livingston,  accounting firm livingston

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Accounting for Income Taxes

As defined in Accounting Standards Codification (ASC) 740, the objectives of accounting for income taxes are to recognize (a) the amount of taxes payable or refundable for the current year, (b) deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an enterprise's financial statements or tax returns and (c) consideration for uncertain tax positions taken.. To properly advise our clients on these matters, our Tax Practice works together with our Audit and Accounting Practice to guide clients through the complexities of income taxes. Together, we provide an evaluation with respect to a client’s position concerning:

  • Current Tax Provision – we prepare the current, Federal and state tax provisions; reconciling pre-tax book income to taxable income for permanent and temporary differences.
  • Deferred Tax Assets and Liabilities – we provide analysis and recommend adjustments to the balance sheet tax deferral accounts for future tax benefits or exposures.
  • Valuation Allowance – we review  the ability to realize deferred tax assets and calculation of potential valuation allowances.
  • Uncertain Tax Positions (FIN 48) – we determine risk exposure and assist clients with required accounting and disclosure of the identified uncertain tax positions.
  • Intraperiod Allocation – we review financial statements to determine appropriate presentation of allocated income taxes as they relate to continuing operations, discontinued operations, prior period adjustments, and the cumulative effect of a client’s change in an accounting principle.
  • Interim Periods – we review financial statements for reporting periods shorter than a full fiscal year, if required.
  • Business Combinations – we review financial statements to determine if there are any off balance sheet tax risks as well as any significant deferred tax issues that may affect the economics of a deal (See Mergers & Acquisitions for more details).
  • Foreign Operations – we assist foreign entities that have chosen to establish businesses in the United States, as well as United States businesses that have set up entities in foreign countries, and we  review any significant differed tax issues that may result from such organization structures
  • Forex Currency Translations – for entities with foreign subsidiaries, we determine the functional currency of the foreign entities, remeasure financial statements of the foreign entity into the reporting currency of the United States parent company, and analyze the recording of gains and losses on the translation of such currencies.