Accounting for income taxes in interim periods: back to basics

As we wrap up the first quarter of the new year, join host Heather Horn and PwC tax specialists, Jenn Spang and Kassie Bauman, as they discuss some of the key considerations and complexities in accounting for income taxes during interim periods. Topics include: 0:51 - How it works. We begin with an overview of how to calculate a quarterly income tax provision, including how to estimate the annual effective tax rate (AETR). 7:39 - Ordinary income. What does ordinary income mean in the context of your interim tax provision? Jenn explains. 10:21 - Discrete items. Kassie shares examples of what qualifies for treatment as a discrete item and the judgment involved. 16:51 - Exceptions and limitations. Kassie and Jenn discuss a few exceptions to using the worldwide estimated AETR. 22:55 - Roll of the controller. Setting the AETR involves more than just the tax department—it is a cross-specialty process. We close by discussing the importance of engaging the right people from the beginning and working together to apply the right controls and processes. Jennifer Spang is a tax partner in PwC's National Office specializing in tax accounting under US GAAP and IFRS. She has over 25 years of experience helping companies in a variety of industries navigating complex tax accounting matters. Kassie Bauman is a managing director in PwC's National Office who consults on tax accounting under US GAAP and IFRS. Kassie has more than 20 years of auditing and accounting experience, including almost a decade of experience addressing complex technical accounting matters as part of our National Office. Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With nearly 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting. Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com . Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.