What it is
This workbook computes the income tax provision for a taxpaying entity under ASC 740. Enter pretax book income and rates, list each permanent and temporary difference with its beginning deferred balance, and the workbook calculates current tax, deferred tax, the effective rate, the balance sheet components and a rollforward of the net deferred balance.
A rate reconciliation is built from the same inputs, and a tie-out compares it with the provision. If the unreconciled line is not zero, an input is missing or a beginning balance sits on the wrong row. Rates are inputs: the federal rate is pre-filled as an editable value, and law-specific items are inputs you set from your own analysis.
When to use it
- Preparing the year-end tax provision for a private company.
- Auditing a client’s provision and recomputing current and deferred tax.
- Supporting the income tax note: components of the provision, deferred tax balances and the rate reconciliation.
What’s inside
- Inputs for pretax income, federal and state rates, deferral rate, credits and tolerance
- Differences tab with temporary and permanent items, ending deferred tax and deferred expense
- Valuation allowance tab and provision summary with balance sheet components
- Deferred tax rollforward and rate reconciliation with unreconciled-difference check
- Legend tab with sign conventions and notes on each input
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
Does it include the 21% federal rate?
The federal rate cell is pre-filled at 21%, the federal corporate rate under IRC section 11(b), as an editable input rather than a fixed constant. Enter each state and foreign rate from the entity’s own filings. Federal tax law changed in 2025 (Pub. L. 119-21), and ASC 740 recognizes the effect of a change in tax law in the period of enactment, so enter its effect on current and deferred tax from your own analysis.
How do I enter a net operating loss?
Treat it as a temporary difference: a negative beginning future deductible amount, with the amount used in the year as a negative adjustment to taxable income. If taxable income is negative the current tax floors at zero and the check flags it, so model the NOL generated as a deferred tax asset and assess it for a valuation allowance.
What does the unreconciled difference mean?
It means the rate reconciliation does not explain the provision. The usual causes are a beginning deferred balance entered on a Permanent row, an item recorded outside the provision (OCI or an acquisition) left out of the OCI column, or a taxable loss. Fix the input rather than the formula.
Does it handle uncertain tax positions or interim periods?
No. Use the uncertain tax positions rollforward for ASC 740-10 recognition and measurement. Interim reporting, intraperiod allocation and business combinations need their own analysis.
Related templates
- Rate Reconciliation Template (ASC 740)
- Deferred Tax Rollforward and Valuation Allowance Worksheet
- Uncertain Tax Positions Rollforward (ASC 740-10)
Last updated 11/05/2026. All free templates.