STRATEGY POLICY INVENTORY DATA
SYSTEM PROCESS
CONTROL SUSTAIN
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ROAD TO LEASE COMPLIANCE
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PROCESS
etc. – that will be required to facilitate the new lease accounting calculations.
According to PwC, "tax departments may identify necessary changes, or more
optimal methods, related to their historical tax treatment of leases and related
items.
A tax change in method of accounting may be available to provide more
appropriate or benefited tax reporting prospectively for leases. Specifically,
tax departments may need to review the following U.S. tax accounting method
items in conjunction with the adoption of the new leasing standard:
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For tax departments, during the adoption of the new accounting model it
is important to review the data repository of the organization's entire lease
portfolio, inclusive of renewal options, lease terms, payment schedules, etc.
from both a financial accounting and income tax perspective. This will enable
companies to effectively:
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Characterization of leases (i.e., sale, lease, or financing)
Timing of income or expense under IRC Section 467
Treatment of tenant improvement allowances
Treatment of lease acquisition costs
Identify differences between the current standard and new standard
Inventory all existing leases and deferred income tax items associated
with the leases
Assist in the computation and reconciliation of book/tax differences
Assess federal, state, and international tax impacts
Implement a process to properly characterize a lease transaction
under the new standard on a go forward basis, while at the same time
assessing the tax treatment of each lease transaction."
PROCESS
