| M any companies are in the early stages of considering what impact the transition to International Financial Reporting Standards (IFRS) from U.S. GAAP will have on financial reporting. However, are they also thinking about the impact it will have on tax reporting? While practitioners may have focused on the effect that IFRS’s elimination of LIFO would have, other tax accounting implications must be considered. Panelists at SEC roundtables in December 2007 generally agreed that U.S. domestic companies registered with the SEC should be required to file IFRS financial statements at some point in the future and that the SEC should establish a time frame for implementing the requirement. Accordingly, it appears that IFRS is coming and may be replacing GAAP in the future. IMPACT ON TAX ACCOUNTING METHODS
The particular methods of accounting a company uses have many effects outside of financial statements. Consequently, converting financial statements from one reporting standard to another will have broad implications beyond just financial (book) accounting. It will be important for tax return preparers to understand any differences between the old book reporting method and the IFRS reporting method to ensure the proper treatment for tax reporting purposes. Thus, along with retraining preparers of financial statements in a new book accounting method, companies will need to ensure that internal users of financial accounting information, such as the tax department, understand the nuances between the different book methods. Generating awareness will be especially important in the year of change because some effects of the conversion may be recorded in equity. Consider, for example, items that are currently treated the same for book and tax purposes. If the book treatment changes as a result of implementing a new IFRS method, companies would need to determine how to continue using the historical tax method. This may lead to several questions: 
Is there a financial conformity rule that needs to be followed under the tax law?
Can the historical tax method be continued, or will the new book method omit information needed to produce the historical tax method?
Does the company have the information available to compute the book/tax differences?
Is the new book method an acceptable method for tax reporting purposes? Depending on the answers to these questions, companies may need to file Form 3115, Application for Change in Accounting Method , to change some historical tax methods. CONCLUSION
It is likely that any global accounting standards that the U.S. may transition to in the future will be different from the IFRS that exists today. Ongoing convergence efforts could continue to lessen the differences and may ease some of the anticipated burden. Nevertheless, tax practitioners need to start thinking now about the tax implications of the transition. For a detailed discussion of the issues in this area, see “IFRS Is Coming: What Does This Mean for Tax?” by Christine J. Newell, CPA, and Frank J. Kalis Jr., CPA, in the June 2008 issue of The Tax Adviser . — Alistair M. Nevius, editor-in-chief
The Tax Adviser Also look for articles on the following topics in the June 2008 issue of The Tax Adviser :
A look at how final regulations might apply the Knight “commonly incurred” test for deductibility of trust administrative costs.
Tools for tax planning for foreign nationals.
A report on single-employer qualified plans. | Notice to Readers: Members of the AICPA tax section may subscribe to The Tax Adviser at a reduced price. Call 800-513-3037 or e-mail taxsection@aicpa.org for a subscription to the magazine or to become a member of the tax section. | | 
