What it is
Many small entities issue statements on the income tax basis, so they match the return. The statements are a statement of assets, liabilities and equity and a statement of revenues and expenses, both on the tax basis, with a note explaining the basis and the main differences from GAAP.
This workbook has both statements with checks, an equity rollforward that must agree to the closing equity, and a reconciliation from GAAP net income and GAAP equity to the tax-basis amounts. The reconciliation lists twelve common differences, plus two blank rows, such as depreciation and Section 179, meals, bad debts, accruals, inventory costs, prepaid expenses and deferred revenue, leases and entity-level taxes.
When to use it
- Issuing tax-basis statements for a partnership, S corporation or owner-managed company.
- Reconciling books kept on GAAP to the return.
- Preparing the basis of accounting note and the list of differences.
What’s inside
- Statement of assets, liabilities and equity, tax basis, with a balance check
- Statement of revenues and expenses, tax basis, with an equity rollforward and tie-out
- Reconciliation of GAAP net income and equity to tax-basis amounts
- Instructions that explain what to leave blank for cash-method taxpayers
- A Checks tab
Standard cited
This template follows AU-C 800 / AR-C 80. 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
Is the income tax basis a special purpose framework?
Yes. AU-C 800 treats the basis of accounting an entity uses to file its income tax return as a special purpose framework. Whether it is presented as a fair presentation or a compliance framework, and the wording of the basis note and report, are decisions for the practitioner.
Do tax-basis statements include deferred taxes?
Not unless the entity’s framework includes them. Describe what the framework does in the basis of accounting note.
Why are there two reconciliation columns?
The income column is the effect on this year’s net income and the cumulative column is the effect on year-end equity. They differ whenever prior-year differences remain.
Related templates
- Compilation Report and Management Letter Shells (AR-C 80)
- Trial Balance Template with Mapping (Excel)
- Independent Auditor's Report — Unmodified Opinion (AU-C 700)
Last updated 11/05/2026. All free templates.