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Dec 3, 2014 10:06:00 AM

Basel III Will Complicate Your Bank’s Deferred Tax Assets

On January 1, 2015, community banks will begin the transition to new Basel III rules. These new capital requirements coming from the Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency promise to complicate the way that U.S. banks calculate deferred tax assets (DTAs) and deferred tax liabilities (DTLs).
Basel III decreases the amount of DTAs that can be used to calculate Tier 1 capital and adds complexity to DTA calculations. A careful comparison of current rules for treatment of DTAs against the new Basel III requirements reveals layers of additional complexity that banks will need to address as they handle tax planning going forward.

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Topics: Basel III, Tax Planning, Deferred Tax Liabilities