Sandra Peters, CFA, is head of the Financial Reporting Policy Group at CFA Institute.
Investors need to request that the companies they invest in include the income tax footnote along with their 2017 earnings release. Sandra Peters, CFA, explains why.
Yesterday, Congress passed the tax reform bill that reduces the corporate tax rate from 35% to 21%. Tax law changes will make it into financial statements when they are signed by President Donald Trump. While the changes are not effective until 2018, they significantly impact estimates made in 2017 financial statements once the bill is signed.
The yet-to-be-completed US tax bill reducing the corporate tax rate from 35% to 20% and encouraging the repatriation of earnings is generally seen by investors as a positive development. But investors should be mindful of several resulting tax consequences that may decrease valuations and corporate earnings once the bill is enacted.
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