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Functionality

Multiple Dataset Approach

In the multiple dataset approach, you enter the Return to Provision true-up adjustments for prior periods in a separate dataset. The true-up dataset has the current year's activity in another dataset. The reporting dataset will have the total current provision. There are pros and cons to this approach.

Pros

  • The system automatically calculates the current expense.
  • The amount is recalculated if items change.
  • Permanent adjustments flow from federal to state. Therefore, the state current expense is automatically calculated.
  • Information is isolated from the current year provision.
  • Adjustments to temporary differences do not display in the effective rate report.

Cons

  • There are multiple datasets that need to be managed, including appropriate tax rates.
  • Deferred tax assets/liabilities balances need to be migrated from the true-up dataset. If not, balances will be in two different datasets. Balances can be merged using the dataset combine feature when creating a new dataset.
  • To view reports for the current year provision, be sure you are looking at the appropriate dataset(s). The dataset view needs to be adjusted to view the separate true-up dataset, the current year's provision dataset, and the reporting dataset with the total current year's data.

Permanent Differences and Tax Adjustments

The true-up for these items should impact the current tax expense and the taxes payable. This can be achieved by entering the permanent true-up amount as a permanent difference with an R tag and tax adjustments.
The impact to the current tax expense is computed based on statutory rates.

Temporary and After Tax Temporary Differences

  • The true-up for these items should impact the deferred and current tax expense, the deferred tax asset/liability and the taxes payable.
  • The current and deferred tax expense, deferred tax asset/liability and taxes payable true-up can be achieved by entering the true-up amount as activity with an R tag.
  • The impact to the current and deferred tax expense is computed based on statutory rates.

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 New Tax Provision