When Taxable Income and Special Deductions (TaxableIncomeBeforeLoss + TaxSpecialDeductions) results in a negative amount, you may decide to defer a loss so it could be utilized in a future period. Optimal loss deferral will result in Taxable Income of 0 by deferring a loss equivalent to the sum of Taxable Income and Special Deductions, plus any amounts manually entered in the TaxLossCarryforward account(s).
If Taxable Income is -35,493, the system could defer up to 35,493 of losses in the current period. You can define a rule to defer losses by deferral percent amount automatically. In this example, you could specify TaxLoss0001CFS as the Target Loss account and specify TaxLossesD0001 as the loss Detail account.
The deferral rule that you specify associates the TaxLossCarryforward account (base descendant of TaxLossesCFSTotal) with the loss Detail account (a base descendant of TaxLossesD) for a group of Entities and a group of Excluded Entities.
After you define the NOL Automation deferral rule and then run Force Calculate, the system creates a loss of 35,493 to completely offset the negative Total Income + Special Deductions. The Taxable Income and Current Tax on Taxable Income in the Current Provision now change to 0.
The Tax Losses schedule now shows the booked loss in the TLCCreatedAutomated Rollforward member for the current year for the TaxLossD0001 detail account.
The Temporary Differences schedule now shows the deferred loss under the Automated (CYSys) column for the target TaxLoss0001CFS account.