Repatriating prior year earnings from a foreign subsidiary located in a low-tax country where ASC 740-30 (APB 23) benefits were previously adopted will cause an increase in a corporation's current year effective tax rate.

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Repatriating prior year earnings from a foreign subsidiary may trigger a significant amount of additional tax liability under ASC 740-30 (APB 23) rules, which means that the corporation's current year effective tax rate will increase as a result. This is because the deferred tax liability related to the undistributed earnings will have to be recognized and accounted for when the earnings are brought back to the United States.

Repatriating Prior Year Earnings from a Foreign Subsidiary Located in a Low-Tax