Single Dataset Approach

In the single dataset approach, Return to Provision true-up adjustments for Prior Periods are entered in the Current Period’s Dataset. There are pros and cons to this approach.

Pros

•	A minimal amount of information is needed.

•	All information is in the same dataset.

Cons

•	Adjustments to temporary differences display in the effective tax rate report twice netting to zero.

•	The true-up to the current tax expense requires that the tax adjustment be manually calculated to ensure that the correct current tax rate is used.

•	The state deferred expense is trued up, but state tax adjustments are not.

•	If there is a change in the deferred rates for prior years, the true-up includes the impact of the true-up and the change in rate.

Note: Each true-up item needs to be entered in a dataset.

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 true-up as a tax adjustment code starting with NC_, so that results are represented after the cash provision total.

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 tax expense and taxes payable true-up can be achieved by entering the true-up as a tax adjustment code starting with NC_, so that the results are represented after the cash provision total.

•	The deferred tax expense and deferred tax asset/liability true-up can be achieved by entering the true-up as a deferred only temporary difference.

Net Operating Losses

If the true up is to a year in which the provision was in a Net Operating Loss position, the NOL should be offset, instead of the taxes payable account.