How to calculate the Income Tax Provision on a Corporate Return?

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  • #2985146 Reply
    Felix The Cat
    Participant

    Good Morning,

    I would very much appreciate if someone could guide me in the calculation to determine the Tax Provision on compilation engagement?

    I have the following rough idea:

    1. Look on the Corporation Notice of Assessment: Determine the Current Balance Owing from 2018 (I'm in Canada, but in sure in the USA they have similar documents).

    2. Look at the ‘Statement of Interim Payments’ ➡️ determine the amoutn of payments made (deduct from balance owing )

    3. Add the interest Charges

    4. Deduct Installments paid

    And then what do I do ?????

    Thanks and stay healthy,

    Ftc

    Havent decided when I will be writing BEC, FAR, REG, AUD
    #2985686 Reply
    Icarito
    Participant

    People make an entire career of calculating tax provisions.

    You are missing the 2019 Provision amount. In it's most simple form:
    PTBI/L
    + favorable/unfavorable temps/perms (GAAP to Stat or Stat to tax)
    (utilize NOL if available)
    x tax rate = current provision.

    Also need to include 2018 return to provision (true up 2018 provision amount to 2018 return filed) and there is also a deferred aspect of the provision for DTA/DTLs as well as tax adjustments for things like FIN48.

    FAR - 80 (4/1/2019)

    BEC - 82 (9/7/2019)

    AUD - 81 (11/23/2019)

    REG - 94 (3/9/2020)

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