WASHINGTON -- The Federal Reserve Board has approved a complicated rule change that effects how banks account for deferred taxes.
The rule, a long-expected adoption of Financial Accounting Standards Board statement 109, limits the amount of deferred taxes that a bank can count as an asset for tier one capital purposes.
Banks must limit the amount of deferred taxes they include for capital purposes to the lesser of either 10% of tier one capital or the amount of the tax credit the institution expects to use during the coming year.
The rule is to take effect on April 1.