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US GAAP and IFRS Convergence: Don't Forget the Impact on State and Local Taxes
The ability of individuals to interact with numerous global markets has greatly increased. However, despite the fact that investors have unprecedented access to markets around the world, they still do not have a consistent accounting standard on which to evaluate the financial results of companies operating in numerous different countries.Taxand US examines the adoption of merging the International Financial Reporting Standards (IFRS) and the US Generally Accepted Accounting Principles (GAAP) accounting principle and the initial financial products it will impact.
Since the possible adoption of IFRS in the US is about five or six years away, it is important to have a basic understanding what the IFRS is, what significant convergence projects are currently under consideration, and what deadlines are being set for potential standards to be issued. Once these major convergence projects have been identified, it is then important to examine what impact these possible changes will have on state and local taxes.
We have only scratched the surface of the significant state and local tax implications of the IFRS and GAAP convergence. While many companies may focus on the federal tax implications arising from the above convergence projects, important state tax implications must be considered and as we go further down the path of convergence, more significant issues will become apparent. So, as the SEC continues down its roadmap to adoption, tax departments should be developing their own roadmaps to address the convergence.
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