Tax Accounting

Chapter 7

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Tax Book Maintenance

You can copy your assets and transactions from your corporate book to
your tax books automatically using Mass Copy.
Use Initial Mass Copy once to set up your tax book with assets from your
corporate book. Then use Periodic Mass Copy each period to update the
tax book with new assets and transactions. You also can manually add a
single asset to a tax book.
To initially populate a new tax book with assets and transactions:
Step 1. Navigate to the submit request window to submit the Initial Mass
Copy.
NTaxInitial Mass Copy
Step 2. In the Parameters window, enter the name of the tax depreciation
Book to which you want to copy your corporate book assets and
transactions.
Step 3. Choose Submit to submit a concurrent process that copies assets
and transactions into your new tax book.
Step 4. Review the log file and correct any errors.
Step 5. Run the Initial Mass Copy program again if necessary.
Step 6. Review the log file after the request completes.
To periodically update a tax book with assets and transactions:
Attention: Ensure that you have run Initial Mass Copy for your tax book if
you added assets to the corporate book before this period. You also must
close the appropriate period in the corporate book before copying assets
and transactions to a tax book.

Navigate to the Periodic Mass Copy submit request

window
NTaxPeriodic Mass Copy

Enter the Book and Corporate Period from which you

want to copy assets and transactions for the period.
Review the log file and correct any errors.

To manually add a single asset to a tax book:

Step 1. Navigate to the Assets window.
NAssetsAsset Workbench

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Step 2. Find the asset you want to add to a tax book.

Step 3. Choose Books.
Step 4. Enter the name of the tax Book to which you
want to add the asset.
Step 5. Review the depreciation rules.
Step 6. Save your work.

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Determining Deferred Income Tax Liability

You can determine either actual income tax liability or future deferred
income tax liability. You can calculate deferred depreciation and create
deferred depreciation journal entries for your general ledger. Deferred
depreciation is the difference in depreciation expense taken for an asset
between a tax book and its associated corporate book.
To calculate journal entries for ACTUAL income tax liability:
Step 1. Submit a request to create deferred journal entries.
NJournal EntriesDeferred
Step 2. Enter the tax book from which you want to create journal entries
for your general ledger.
Step 3. Enter the period in your tax book from which you want to create
journal entries.
Step 4. Choose Submit to submit a concurrent process to create deferred
depreciation journal entries.
Step 5. Review the log file after the request completes.
To calculate FUTURE income tax liability:
Step 1. Project annual depreciation expense in the corporate book and the
tax book.
You can project depreciation expense for future periods based on the
assets current financial information. To calculate your tax liability, run
depreciation projections as soon as you close your corporate and tax books
for the fiscal year. You project depreciation expense for several years,
beginning with the next fiscal year. When you wait until the end of a fiscal
year to project depreciation, Oracle Assets calculates depreciation expense
using financial information from the entire previous fiscal year.
Step 2. Run the Recoverable Cost Report for the last period of the fiscal
year you just closed to determine the recoverable cost in the corporate and
the tax book as of the end of the fiscal year.
Step 3. Adjust the depreciation projection values to account for the
permanent differences in depreciation between the two books.

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Assigning Tax Credits

You can assign an Investment Tax Credit to an asset in a tax book only if
you allow ITC for that tax book and category, and if it is depreciating using
a lifebased method.
To assign tax credit rates for an asset:
Step 1. Navigate to the Assets window for taxes.
NTaxTax Workbench
Step 2.
Step 3.
Step 4.
Step 5.

Find your asset.

Choose Investment Tax Credits.
Scroll to the record to which you want to assign tax credit rates.
Specify the ITC rate and the Basis Reduction Rate for the asset.
Note the new recoverable cost of the asset. Oracle Assets
calculates the ITC basis, ITC amount, and the recoverable cost
automatically.
Step 6. Save your work
To cancel ITC for an asset:
Attention: You can cancel ITC for assets added in the current period only.
Erase the rate and save your change.
To change a previously assigned ITC rate for an asset:

Change the rate and save your change.

You cannot change any ITC information if retirements are pending or if the
asset is fully reserved or fully retired.

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Updating an ACE Book with Accumulated

Depreciation
United States tax law defines the Adjusted Current Earnings (ACE)
depreciation rules. You can update your ACE book according to ACE rules
automatically.
The following table summarizes the ACE rules:
Federal Book
Depreciation
Method

ACE Book
Depreciation
Method

ACE Book
Asset Life

ACE Book
Prorate Life

ACE Book
Depreciable
Basis

ACRS

STL

Remaining
Life

New

Federal NBV at
the start of
1990

MACRS before
1990

STL

Remaining
Life

New

AMT NBV at the

start of 1990

All after 1989

(including
MACRS)

STL

Whole Life

New

Federal Book
Cost

All Others

Federal Book

Remaining
Life

Old

Federal NBV at
the start of
1990

To update the ACE book to the current period:

Step 1. Run the ACE exception reports (ACE Unrecognized Depreciation
Method Code Exception Report and the ACE NonDepreciating Assets
Exception Report).
The reports evaluate the financial information in your federal
tax book as of the end date of the open period in your ACE
book and list the assets that Oracle Assets cannot update in the
ACE book. Manually update these assets in the federal book
according to ACE rules.
Step 2. Run depreciation on your ACE book to close the period.
Step 3. Run the Populate ACE Interface program to automatically insert
information into the ACE conversion table for your assets according to
ACE rules.
Step 4. Run the Update ACE Book program to update the financial
information in your ACE book as of the end date of the most recent closed
period.
Update your ACE book in the first period of a fiscal year,
before you enter any transactions.
Step 5. Run depreciation and periodic mass copy to update the ACE book
to the current period if necessary.

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 To prevent assets added after December 31, 1993 from being

copied to your tax book, uncheck Copy Additions after that
date in the Book Controls window.
Note: If you run the balances reports for the first period of your ACE
book, expect the report to be out of balance. Oracle Assets only updates
the accumulated depreciation, not the depreciation expense, when you
update an ACE book.
Step 6. Run the ACE Depreciation Comparison Report to review a list of
differences in depreciation between your ACE, federal, and AMT books.
To run the ACE reports:
Step 1. Run the ACE Exception Reports request set.
NTaxAdjusted Current EarningsRun Exception Reports
Step 2. In the Parameters window, enter the ACE Book and Federal
Book.

Step 3. Choose Submit.

Step 4. Review the reports after the request completes.
To populate the ACE interface table:
Step 1. Run the Populate ACE Conversion Table request set.
NTaxAdjusted Current EarningsPopulate ACE Interface
Step 2. In the Parameters window, enter the ACE Book you want to
populate.

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 The ACE book must use the same associated corporate book as
the federal tax book and the AMT book.

Step 3. Choose Submit.

Step 4. Review the log file after the request completes.
To update the ACE book from an interface:
Step 1. Run the Update ACE Tax Book program.
NTaxAdjusted Current EarningsUpdate ACE Book
Step 2. In the Parameters window, enter the ACE Book you want to
update.

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Step 3. Choose Submit.

Step 4. Review the log file after the request completes.

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Adjusting Tax Book Accumulated Depreciation

If your tax authority requires you to change the depreciation taken for an
asset in a previous fiscal year, you can adjust the depreciation for one or
more assets for that year in your tax book.
To adjust tax book depreciation for a single asset:
Step 1. Navigate to the Assets window.
NTaxTax Workbench
Step 2. Find the asset for which you want to adjust the depreciation
expense.
Step 3. Choose the Reserve Adjustments button.
Step 4. Enter the tax Book in which you want to make the adjustment.
Step 5. Enter the Fiscal Year for which you want to adjust depreciation.
Step 6. Enter the assets new depreciation expense for the fiscal year you
are adjusting.
Attention: You cannot adjust the depreciation taken in a previous fiscal
year for assets using a units of production depreciation method.
Attention: You also cannot adjust the depreciation for assets on which you
have performed an amortized cost adjustment since the end of the fiscal
year you are adjusting.
Step 7. Save your work to automatically adjust the assets accumulated
depreciation for that year and all subsequent years up to the current fiscal
year.
To adjust tax book depreciation for a group of assets:
Note: Ensure that you have run depreciation to close the previous fiscal
year for the tax book you want to adjust, its associated corporate book,
and the control tax book.
Step 1. Navigate to the Mass Depreciation Adjustments window.
NTaxMass Depreciation Adjustments
Step 2. Enter the Adjusted tax Book for which you want to adjust
depreciation.
The open period of the book must be the first period of the
following fiscal year with no transactions entered.
Step 3. Enter the name of the Control Book that holds the minimum
accumulated depreciation control.
Oracle Assets does not adjust the depreciation for each asset in
the adjusted book to be less than the depreciation in the control

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book. The control book must have the same associated

corporate book as the adjusted book.
Step 4. Enter the factor by which you want to adjust depreciation above
the minimum.
Oracle Assets adjusts the previous years depreciation expense
in the adjusted book according to this formula:
Adjusted Depreciation Expense = Minimum
Depreciation + Depreciation Adjustment Factor _
(Maximum Depreciation Minimum Depreciation)
Step 5. Choose Preview.
You must preview the effects of the adjustment in
the Mass Depreciation Adjustment Preview Report
before you perform it.
If necessary, modify the adjustment definition
and run preview again.
Step 6. Find the definition you want to perform using the
Mass Transaction Number.
Step 7. Choose Run to perform the adjustment.
Step 8. Review the log file after the request completes.
Step 9. Optionally choose Review to run the review
report to show the effects of the adjustment.

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