What it is
Interim periods use an estimate of the effective tax rate for the full year. The rate applies to year-to-date ordinary income, discrete items are added in the quarter they occur, and the quarterly provision is the change in the year-to-date total. This workbook runs that computation from a forecast you update each quarter.
The Rate tab builds the estimated annual rate from the forecast, statutory and state rates, credits and permanent items. The Quarterly tab applies it, adds cumulative discrete items and derives each quarter’s provision. The JE tab splits the quarter into current and deferred.
When to use it
- At each quarter end for an entity that reports interim financial information.
- When the full-year forecast changes and the estimated annual rate needs updating.
- When a discrete item arises, such as a change in tax law or in judgment about a prior-year position.
What’s inside
- Rate tab with forecast, statutory and state rates, credits, valuation allowance effect and permanent items
- Estimated annual effective tax rate and the change from the prior quarter
- Quarterly tab with year-to-date ordinary income, discrete items and provision by quarter
- Rate override column and a tie-out of quarterly provisions to the year-to-date total
- JE tab with the current and deferred split
Standard cited
This template follows ASC 740. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
What is a discrete item?
A discrete item is a tax effect recorded in full in the interim period it occurs, outside the estimated annual rate. Examples are the effect of a tax law change and a change in judgment about the realizability of a deferred tax asset related to a prior year.
Why does the quarterly provision change when the forecast changes?
The estimated annual rate applies to all year-to-date ordinary income. A new estimate changes the year-to-date tax, and the difference lands in the current quarter. Earlier quarters are not restated.
Where do I enter a permanent difference?
List it on the Rate tab as the amount it increases or decreases taxable income. The estimated annual rate rises or falls with it.
Does the workbook decide tax rates or loss limitations?
No. Rates, credits, jurisdictions and loss limitation rules are inputs from the tax provision. The workbook carries the arithmetic.
Related templates
- Income Tax Provision Workbook (ASC 740)
- Rate Reconciliation Template (ASC 740)
- Deferred Tax Rollforward and Valuation Allowance Worksheet
- Disclosure Checklist: Income Taxes (ASC 740)
Last updated 11/05/2026. All free templates.