When Should a Change in Tax law be Accounted For?

Generally, a change in tax law should be accounted for in the period in which the change is enacted. For example, if a new law is passed on December 1st, companies would account for the change in their financial statements as of December 31st. There are some exceptions to this rule, however, such as when a company has an accounting period that does not coincide with the calendar year. In these cases, companies may account for changes in tax law in their next accounting period.