ICBA thanked the Financial Accounting Standards Board for acting quickly to address complications from the Tax Cuts and Jobs Act, but recommended changes to simplify the process for community banks.
The tax law triggered the need to assess impairments of deferred tax items due to the change in the corporate tax rate and imbalances in accumulated other comprehensive income.
Under FASB’s exposure draft, banks would reclassify amounts from AOCI to retained earnings due to the tax law. The proposal would be effective for all banks for fiscal years beginning after Dec. 15, 2018, and interim periods within those fiscal years. Early adoption would be permitted.
In a new comment letter, ICBA noted that running the fix through retained earnings continues to show tremendous fourth-quarter reported losses for some banks. ICBA instead asked FASB to provide community banks the option to run the fix through reported earnings, thereby addressing distortions to both regulatory capital and reported earnings.
For more information, contact ICBA's James Kendrick at firstname.lastname@example.org.
Read ICBA Comment Letter
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