NetAsset - Book Period differs from Tax Period
Overview
In some cases, a user's fiscal year might differ from their tax year. For example, for book purposes a client's fiscal year might begin on September 1st, whereas their tax year might begin on January 1st. In this case, each separate schedule will need different start dates. Luckily, NetAsset is able to handle such a case. Please note that the process for bringing in historical assets as part of the go-live will be slightly different than the process of adding new assets in the year of go-live and years after.
If your fiscal year aligns with your tax year, you do not need to follow the steps below or create a custom historical Tax Year. NetAsset will automatically select the correct start date for your tax schedules based on the accounting periods set in your NetSuite.
Prerequisites
In order to generate tax schedules with Tax Complete, you first need to ensure that you have completed your Tax Complete configuration. It is also recommended that you familiarize yourself with the process of applying Tax Years in NetAsset.
Step by Step Process
New Assets being added to NetAsset post go-live
For new assets that were placed in service during or after the year of go-live, there is no additional setup needed besides the standard configuration of your Tax Years. The "Start Date" field on your Tax Year will determine the start date of your tax schedule, regardless of when the fiscal year begins according to the NetSuite Accounting Periods. For each year post go-live, you will create a new Tax Year record, which will be applied to the assets that were placed in-service that year.
Historic Assets placed in service in years prior to go-live
The process for applying Tax Years to assets that were placed in service prior to the year of go-live is slightly different. Let's say a company has been placing assets in service for 10 years before switching to NetAsset. Having to create 10 separate, historical Tax Years in NetAsset to apply to the historical assets would be a lot of work. So, instead, you only need to create one tax year to be used for all historical assets being placed in service during the NetAsset implementation. And instead of working through the standard "Apply Tax Years" process, historical assets will simply be tagged to a Tax Year via a field on the alternate schedule.
Start by creating your new Tax Year. Give your Tax Year a unique name such as "Historical Tax Year," so that you can easily recognize that this Tax Year is to be used for historical assets only. Leave fields "Sections 179 Amount," "Section 179 Limitation," and "Section 168 Percentage" as zero, as these amounts will not be the same across multiple years. If the historical assets did make use of section 179 or section 168 deductions, these amounts should be saved to the individual asset records during asset data import.
When entering your Key Dates data on your new historical Tax Year, note that it does not matter what year you enter. NetAsset will only be looking at the month selected. To determine the year, NetAsset will be looking at the in-service date on an asset-by-asset basis. Once your Key Dates have been added, Save your Tax Year.
For your historical assets, you will not go through the standard "Apply Tax Years" process. Rather, when you upload your historical assets into NetAsset as part of your implementation, ensure to add a new column to your CSV file for your "Tax Year." This is because you need to map your new historical Tax Year to the assets you are uploading into NetAsset. Once you complete your data upload and the new pending asset records have been added with their tax information, proceed with generating your alternate schedule.
As you can see once the alternate schedule has been generated, even though the Tax Year applied had a "Start Date" of 1/1/2019, NetAsset recognized that this asset was actually placed in service in 2020 and generated the schedule accordingly.
Please note that if an asset is placed into service during the tax year of go-live, but in months prior to the NetAsset go-live, that asset will go through the standard apply Tax Years process after year-end, and will not need the "Alternative Tax Year" field added manually. This is because NetAsset calculates tax depreciation on an annual and not on a monthly basis.
For example, if your NetAsset go-live date is 8/1/2024 and your tax year begins on 1/1/2024, any assets placed in-service from 1/1/2024 - 12/31/2024 will go through the standard apply Tax Years process. Assets placed in service on 12/31/2023 or earlier, will need the new historical Tax Year added to the asset record manually/via CSV.