The Tax Reform Act of 1986 affects the net income to be recognized by an investor in a safe harbor lease over its remaining life. The FASB issued two Exposure Drafts of a proposed FASB Statement addressing the accounting for safe harbor leases but did not issue a final Statement. As a result, investments in safe harbor leases may be accounted for in a variety of ways. The first Exposure Draft, issued October 29, 1981, does not address the subsequent accounting required by the change in tax law or other significant assumptions. The revised Exposure Draft, issued April 13, 1982, however, states that income from a safe harbor lease should be recalculated, similar to the requirements for leveraged leases in paragraph 46 of Statement 13. The issue is how to calculate and report the effect of the change in tax law. EITF DISCUSSION The Task Force reached a consensus that, if the investor accounted for the investment under the revised Exposure Draft, the lease should be recalculated from inception in accordance with paragraph 11 of the revised Exposure Draft. The difference between the amounts originally recorded and the recalculated amounts would be included in income of the year in which the tax law is enacted (a cumulative catch-up adjustment)
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