1.07 Income taxes paid: state and local taxes are given as one line
Company C · a US-listed specialty healthcare products company · SEC-style question
In brief
The first income-taxes-paid table under the new income tax disclosure standard shows total taxes paid of [amount], with [country], the [country] and [country] listed separately and state and local taxes of [amount] on one line. The standard requires each individual jurisdiction at or above 5% of total taxes paid to be shown separately: [amount] here. The note does not say whether any single state reached that level.
The evidence, as filed
What the filing shows, and what the rule requires
| What the filing shows | What the rule requires |
|---|---|
State and local income taxes paid of [amount] on one line, 16.13% of the [amount] total, with no state named and no statement that none reached the 5% threshold of [amount]. | Each state or local jurisdiction with income taxes paid of [amount] or more shown on its own line, or a sentence that no single state or local jurisdiction reached 5% of total income taxes paid. |
The rule
FASB ASC 740-10-50-22 to 50-23 (as amended by ASU 2023-09)
Summary; FASB/IFRS text is copyrighted Disclose income taxes paid (net of refunds) by federal, state and foreign, and by any jurisdiction at least 5% of total; split pre-tax income domestic/foreign.
Version: Text in force at the date of this review · Source: FASB Accounting Standards Codification, ASC 740-10-50-22 to 50-23 (as amended by ASU 2023-09), paraphrased (Codification text is copyrighted)
Why it applies here. the disaggregation by individual jurisdiction applies to states as much as to foreign countries. If the [amount] is spread across many states with none at [amount], the table complies; if one state is at or above that amount it should have its own line. The report does not let a reader tell which.
Why it matters
If a state at or above the threshold is folded into the state and local line, the first-year disclosure falls short of the new requirement and the SEC staff, which has listed the new income tax disclosures among its review themes, may ask for it.
Exposure
None until the company answers; if a state is above the threshold, a staff comment asking for the breakdown in future filings is the realistic outcome.
Our workings
Note 13 gives, for 2025 only, income taxes paid net of refunds: federal nil; foreign by country ([country], the [country], [country]); state and local [amount]; total [amount], which agrees with the cash flow statement. Earlier years are given as totals only, consistent with prospective adoption.
5% of the total is [amount]; [country] ([amount]) is listed because it just passes; the state and local line is 16.13% of the total.
| Item | Working | Result |
|---|---|---|
| Total income taxes paid 2025 | [n] + [n] + [n] + [n] | [n] |
| 5% jurisdiction threshold | [n] x 5% | [n] |
| State and local share of total | [n] / [n] | 16.13% |
Management’s best defense, and our reply
The company can say that no single state reached 5% of total income taxes paid, so the federal, state and foreign split plus the three foreign countries above the threshold is all the standard asks; state minimum and franchise taxes are often spread thin across many states. That is a credible reading and may well be the fact. The answer: the note says nothing either way, so only the company can confirm it, which is why this is a question and not a finding.
The fix
- Add a line for each state at or above 5% of total income taxes paid, or a sentence: 'No individual state or local jurisdiction accounted for 5% or more of total income taxes paid.'
Question for the company
Did any single state or local jurisdiction account for income taxes paid of [amount] (5% of the [amount] total) or more in 2025? If so, can it be shown separately; if not, can the note say that no state or local jurisdiction reached the threshold?
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | The new income-taxes-paid table, 2025 only | Document | Form 10-K 2025, page 93 |
| 2 | State and local taxes paid on a single line | Document | Form 10-K 2025, page 93 |
| 3 | [country] is listed separately | Document | Form 10-K 2025, page 93 |
| 4 | The [country] is listed separately | Document | Form 10-K 2025, page 93 |
| 5 | [country] is listed separately | Document | Form 10-K 2025, page 93 |
| 6 | Cash flow statement total agrees with the note total of [n] | Document | Form 10-K 2025, page 66 |
Prepared by Pramanex from the company’s public SEC filings, without the company’s involvement, to show how a 10-K Pre-filing Check reads. The company is not named, and nothing on this page is a statement about any identifiable company. Observations are not an audit, review or other attestation or assurance engagement, and not legal advice. An SEC-style question is a question, not a conclusion.
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