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Hovering Deficits

The
Hovering Deficits
 screen (available for tax years 2012 and later) is used to record any un-utilized (remaining) hovering deficits available to offset current year earnings and the related tax amount that has not yet been recognized. The system automatically calculates any current year earnings offset and any addition to the tax pool and updates the hovering deficit balances in this screen during rollover to the next year. In the subsequent year binder, the calculated reduction to the E&P pool and increase to the tax pool for the hovering deficit offset are automatically recorded as adjustments in the
Post-86 Earnings and Profits
 and
Post-86 Taxes
 screens.
Any current year offsets for hovering deficits related to Pre-87 earnings layers must be manually calculated and the offsets (and related tax amounts) entered on the Pre-87 Adjustment tab of the Pre-87 E&P and Taxes screen.

Entering Hovering Deficit Information

  1. On the TAS navigation tree, select the
    Foreign Entity folder > Other Adjustments > Hovering Deficits
    .
  2. Enter the transaction date for the Post-86 pool hovering deficit.
  3. Select one of the listed baskets.
  4. Enter the remaining (unutilized) hovering deficit in the entity's functional currency and the related taxes in U.S. Dollars.
  5. Enter a description for this deficit.
  6. Click
    Save
    .

Other Adjustment Tips

On the
Investment in US Property
 screen, enter the average of amounts held at the end of each quarter that was reported in the entity's functional currency and invested in U.S. property during the current year.
To reverse an E&P adjustment that increased E&P, enter a negative amount on the LIFO Limitation Adjustment screen. Alternatively, to reverse an E&P adjustment that decreased E&P, enter a positive amount.

This article applies to:

  • Product: ONESOURCE Income Tax
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