Letter to FASB on the Proposed ASU on Tax Credit Investments

Ms. Hillary H. Salo
Technical Director
Financial Accounting Standards Board
401 Merritt 7
P.O. Box 5116
Norwalk, Connecticut 06856-5116

Dear Ms. Salo:

The American Bankers Association (ABA) welcomes the opportunity to comment on the Proposed Accounting Standards Update—Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method (a consensus of the Emerging Issues Task Force) (the Exposure Draft, or "ED"). The Exposure Draft seeks to expand the availability of the option to apply the proportional amortization method of accounting for income tax benefits received through certain tax credit investments. Under the Exposure Draft, the availability of the option would be expanded from certain investments in affordable housing to any tax credit investment that meets specified criteria. Consistent with our agenda request sent in May 2021, ABA supports FASB's efforts to respond to investor needs, while also reducing the cost and complexity in preparing such information.

Banking institutions are significant participants in tax credit investment programs and generally believe these programs encourage capital investments in disadvantaged communities. Accounting for investments in Low Income Housing Tax Credits (LIHTC) was amended in Accounting Standards Update 2014-01: Accounting for Investments in Qualified Affordable Housing Projects ("ASU 2014-01") to better to align it with how economic decisions in such investments are made. ABA believes that improvement is needed in the accounting treatment for investments in a range of tax credit investments, such as those made in the New Markets Tax Credit ("NMTC"), Historic Rehabilitation Tax Credit ("HTC"), and various renewable energy tax credits like those made in solar power, on- and off-shore wind power and other projects.

Download the comment letter to read the full text.