# Tax Automation Calculation Methods

The system supports these types of Tax Automation calculations:

• Annualize—Allows partial year amounts to be annualized to a full year amount.

Example

The trial balance has been loaded in P03, and the Meals and Entertainment expense for the three months ending March 31 is \$3,000. To annualize to a full year, or 12-month estimate, the \$3,000 amount must be converted to a monthly/quarterly amount, and then converted to a full 12 month/4 quarter estimate, as follows:

```Monthly periods (\$1,000) * 12 = \$12,000
Quarterly periods (\$3,000/3) * 12 = \$12,000```

Default Setting - Scenario, Year and Period: The Annualize logic uses the same Scenario, Year, and Period as in the POV, if you do not enter any values for them.

Valid Setting - Scenario, Year, and Period are all valid inputs and are selectable with the Annualize logic. This logic is valid for Book accounts or the source Target account. Source Account defaults to Target account; for Annualize logic, only one source account can be specified.

• Move—Takes the difference between the current period amount of the Source account and the last period of the prior year's amount of the Source account, and applies the amount to the Destination account. The Scenario is valid and selectable with the Move Logic. The Year and Period are not selectable.

Example

```MOV 20%
Source Account1:  Prior Year:  100;   Current:  150
Source Account 2:  Prior Year:  50;  Current:  150
Destination = ((150-100) * 20%) + ((150-50)*20%) -= 10 + 20 = 30```
• National Adjustment—Allows for adjustment (for example, reversal) of a National Permanent or Temporary Difference in the Regional Provision.

Example

There is a Permanent Difference in the Current Provision for Subpart F income in the amount of \$100,000. However, the state of Illinois does not tax Subpart F income and therefore is required to reverse this adjustment in a state Permanent Difference account. To reverse the amount, you would apply National Adjustment logic with a percentage of minus 100%.

`Any period (\$100,000) * -100% = \$-100,000`

Default Setting - Scenario, Year and Period: The National Adjustment logic uses the same Scenario, Year, and Period as in the POV, if you do not enter any values for them.

Valid Setting - Scenario, Year, and Period are all valid inputs and are selectable with the National Adjustment logic. This logic is valid for Tax accounts. Source Account for National Adjustment logic defaults to the Target account. Source RollForward is disabled for National Adjustment logic.

• Prior Year - Provides the ability to bring the prior year data into a provision.

Example

There is a Permanent Difference in the Current Provision for tax exempt interest in the amount of \$-1,000,000 in the prior year. You want to use the prior year amount of the tax exempt interest as an estimate in the current year forecast. To use the amount, you would apply Prior Year logic with a percentage of 100%.

`Any period (-\$1,000,000) * 100% = -1,000,000`

Default Setting - Scenario, Year and Period: The Prior Year logic uses the same Scenario as in the POV, if you do not enter any values for it. The default for the Year is the current year minus 1. The default for the Period is P12 or Q4, depending on your application setup.

Valid Setting - Scenario, Year and Period: Scenario, Year, and Period are all valid inputs and are selectable with the Prior Year logic. You cannot select the current year, however prior and future years and periods are valid.

 Note: When using the Prior Year method, you should specify the Source Rollforward.
• Pull—Takes the specified percentage of the Source account and applies it to the Destination account. If there are multiple source accounts on the same row, the system accumulates the amounts. The Scenario, Year, and Period are all valid and selectable with the Pull Logic.

Example

```PULL 50%
Source Account 1:  100
Source Account 2:  50
Destination = (100 * 50%) + (50*50%) = 50 + 25 = 75```
• Squeeze—Calculates the Destination account RF#CYSys amount to ensure that the Destination account RF#Closing is the same as the Source account RF#TBClosingTotal. The Scenario is valid and selectable with the Squeeze Logic. The Year and Period are not selectable.

```A#DestAcct.RF#CYSys = A#SourceAcct.RF#TBClosingTotal -
(A#DestAcct.RF#Closing - A#DestAcct.RF#CYSys)```

If you have multiple Source accounts for the same row, the calculation of the first Source account applies the SQUEEZE method, but the calculation of subsequent Source accounts works similarly to the PULL calculation.

```A#DestAcct.RF#CYSys = A#SourceAcct1.RF#TBClosingTotal -
(A#DestAcct.RF#Closing - A#DestAcct.RF#CYSys)  (SQUEEZE)
A#DestAcct.RF#CYSys = A#DestAct.RF#CYSys + A#SourceAcct1.RF#TBClosingTotal  (PULL)```

Example

```A#SourceAcct1.RF#TBClosingTotal = 6000
A#SourceAcct2.RF#TBClosingTotal = 7000
A#DestAcct.RF#CYSys = 0
A#DestAcct.RF#OtherDO = 1000
A#DestAcct.RF#Closing = 1000
A#DestAcct.RF#CYSys= 6000 - (1000 - 0) = 5000  (apply SQUEEZE with first Source account)
A#DestAcct.RF#CYSys = 5000 + 7000 = 12000 (apply PULL for second Source account and accumulate to Destination)```