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Functionality

Single Dataset Approach

In the single dataset approach, you enter the Return to Provision true-up adjustments for Prior Periods in the Current Period’s Dataset. There are pros and cons to this approach.

Pros

  • You need a minimal amount of information.
  • You have all information in the same dataset.

Cons

  • Adjustments to temporary differences appear in the effective tax rate report twice netting to zero.
  • The true-up to the current tax expense requires that the tax adjustment you calculate the tax adjustment manually to ensure the correct current tax rate is used.
  • The state deferred expense is trued up, but state tax adjustments are not.
  • If there is a change in the deferred rates for prior years, the true-up includes the impact of the true-up and the change in rate.

Permanent Differences and Tax Adjustments

The true-up for these items impact the current tax expense and the taxes payable. You achieve this by entering the true-up as a tax adjustment code starting with NC_, so that results are represented after the cash provision total.

Temporary and After Tax Temporary Differences

  • The true-up for these items impact the deferred and current tax expense, the deferred tax asset/liability, and the taxes payable.
  • The current tax expense and taxes payable true-up can be achieved by entering the true-up as a tax adjustment code starting with NC_, so that the results are represented after the cash provision total.
  • The deferred tax expense and deferred tax asset/liability true-up can be achieved by entering the true-up as a deferred only temporary difference.

Net Operating Losses

If the true up is a year in which the provision was in a Net Operating Loss position, the NOL should be offset, instead of the taxes payable account.

This article applies to:

  • PRODUCT: ONESOURCE Tax Provision