This example shows a sample data flow when linking a Tax Loss Carryforward account with a Tax Loss Detail account using the Tax Detail property.
When you click the TLCOriginationYear button, the application automatically populates the Year of Origination.
Amounts in the 21+ category are aggregated data from prior years.
When you click the CopyTLCExpirationYear button, the application automatically populates the Year of Expiration. For example, the year of expiration would be copied from P11 to P12 in 2012.
(1) Deferring a Tax Loss
As an example, entering 100,000 will offset the taxable loss in the Current Provision.
The Tax Losses schedule is updated for the tax loss deferred.
The Temporary Differences are updated for the tax loss deferred.
(2) Entering a tax loss expiration or other adjustment to the tax loss schedule
A tax law required the write-off of losses originating from years prior to 2006 and automatically expired losses originating from 2007. In this example, adjustments of (2,000) and (70,000) were entered in the Other Adjustments and Expiration columns in the Tax Loss schedule.
The amounts automatically move to the Temporary Difference schedule in the Other Adjustments Automated column in the amount of (72,000), or (2,000) plus (70,000).
(3) Entering a tax loss utilized amount in the Tax Loss schedule
In this example, the company had a taxable profit of $75,000 in 2012 and will utilize loss carryforward amounts of $39,500 starting with the oldest losses first.
The utilization of Carryforward losses (39,500) will be transferred to the Current Provision automatically.
The utilization of the Carryforward tax losses (39,500) will be transferred to Temporary Difference.
RTA and Acquisition Columns in the Tax Loss Schedule
You enter amounts in the RTA and Acquisition schedule manually as one amount for all years (a total for all years impacted). Consequently, amounts move from RTA and Acquisitions to Temporary Difference, as the Temporary Difference has the same level of detail (total for all years impacted). The detail in the Tax Loss schedule is to capture both the year of origination, and more importantly, the year of expiration. You must manually enter these amounts based on the detail. For example, a Return to Accrual adjustment for $100 could cover two years. While the RTA would show $100, the Tax Loss Detail Schedule would have adjustments to more than one year or multiple years.
The total ending balance in the Tax Loss Schedule is subject to validation by the system, where the ending total in the tax loss schedule is compared to the ending total carryforward, plus the current year account in Temporary Differences. When the two amounts do not match, a validation error is noted in the Validations data form and report.