Guide to Accounting for Income Taxes.

Guide to Accounting for Income Taxes, by Marilyn Rutledge, Stephen Holton and Howard McMurrian, Practitioners Publishing Company, P.O. Box 966, Fort Worth, Texas 76101, 1988, paginated by section, $94.

The key provisions of Financial Accounting Standards Board Statement no. 96, Accounting for Income Taxes, are summarized in this guide in a clear and concise manner. The authors begin with the development of the statement, a brief description of the liability method and a comparison of Statement no. 96 and Accounting Principles Board Opinion no. 11, Accounting for Income Taxes. The material covers temporary and permanent differences, giving examples and detailed discussion on the scheduling requirement.

The calculation of current taxes and of the alternative minimum tax (AMT), the book income adjustment and the adjusted current earnings adjustment are covered in the chapter on calculating current income taxes. It also touches on net operating losses (NOLs) and the effect of carryforwards and carrybacks on the regular tax system and the AMT system.

The section on calculating deferred income taxes starts with the basic calculation and review of AMT considerations. It is then divided into four parts: calculating deferred tax liabilities when there are only credit temporary differences; calculating deferred tax assets when there are only debit temporary differences; calculating deferred tax balance sheet accounts when there are debit and credit temporary differences and tax planning strategies. The first three parts include in-depth analysis of the basic calculation under the regular tax system as well as the AMT system. The AMT credit, NOL carryforwards and net credit and debit reversals also are covered within the respective sections.

An overview of the requirements of Statement no. 96 is included in the section on presentation and disclosure of income taxes. Aspects of reporting tax assets and liabilities on the balance sheet, in addition to the current versus noncurrent determination, are covered, followed by the effect of the income tax expense on the income statement.

Assuming the FASB doesn't continue to delay its effective date, the guide provides a good working background for those involved in implementing this statement.

Sandra J. Strickland, CPA assistant to vice-president of finance and administration Maine Yankee Atomic Power Company Augusta, Maine