| US GAAP | IFRS |
| Tax basis | Tax basis is a question of fact under the tax law. For most assets and liabilities there is no dispute on this amount; however, when uncertainty exists it is determined in accordance with ASC 740-10-25 (formerly FIN 48) | Tax basis is generally the amount deductible or taxable for tax purposes. The manner in which management intends to settle or recover the carrying amount affects the determination of tax basis. |
| Taxes on intercompany transfers of assets that remain within a consolidated group | Requires taxes paid on intercompany profits to be deferred and prohibits the recognition of deferred taxes on differences between the tax bases of assets transferred between entities/tax jurisdictions that remain within the consolidated group. | Requires taxes paid on intercompany profits to be recognized as incurred and requires the recognition of deferred taxes on differences between the tax bases of assets transferred between entities/tax jurisdictions that remain within the consolidated group. |
| Uncertain tax positions | ASC 740-10-25 requires a two-step process, separating recognition from measurement. A benefit is recognized when it is “more likely than not” to be sustained based on the technical merits of the position. The amount of benefit to be recognized is based on the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. Detection risk is precluded from being considered in the analysis. | IFRS does not include specific guidance. IAS 12 indicates that tax assets and liabilities should be measured at the amount expected to be paid. Some adopt a “one-step” approach which recognizes all uncertain tax positions at an expected value. Others adopt a “two-step” approach which recognizes only those uncertain tax positions that are considered more likely than not to result in a cash outflow. Practice varies regarding the consideration of detection risk in the analysis. |
| Initial recognition exemption | Does not include an exemption like that under IFRS for non-recognition of deferred tax effects for certain assets or liabilities. | Deferred tax effects arising from the initial recognition of an asset or liability are not recognized when (1) the amounts did not arise from a business combination and (2) upon occurrence the transaction affects neither accounting nor taxable profit (for example, acquisition of non-deductible assets). |
| Recognition of deferred tax assets | Recognized in full (except for certain outside basis differences), but valuation allowance reduces asset to the amount that is more likely than not to be realized. | Amounts are recognized only to the extent it is probable (similar to “more likely than not” under US GAAP) that they will be realized. |
| Calculation of deferred tax asset or liability | Enacted tax rates must be used. | Enacted or “substantively enacted” tax rates as of the balance sheet date must be used. |
| Classification of deferred tax assets and liabilities in balance sheet | Current or non-current classification, based on the nature of the related asset or liability, is required. | All amounts classified as non-current in the balance sheet. |
| Recognition of deferred tax liabilities from investments in subsidiaries or joint ventures (JVs) (often referred to as outside basis differences) | Recognition not required for investment in foreign subsidiary or corporate JV that is essentially permanent in duration, unless it becomes apparent that the difference will reverse in the foreseeable future. | Recognition required unless the reporting entity has control over the timing of the reversal of the temporary difference and it is probable (“more likely than not”) that the difference will not reverse in the foreseeable future. |
