Tax book in FA is set up to track assets and depreciation as per you Tax laws.

Basically there are two

depreciation - depreciation for you accounting and financial reporting - This is based on the Corporate
Book you set up and depreciation as per you tax laws - which is based on your tax book.
Setup Configuration

The following setup processes are required for a Tax Book

1.

Define a Tax Book which is attached to a corporate book

2.

Define asset categories for those will be maintained in Tax Book

3.

Copy asset from Corporate Book to Tax Book for the first time. CIP Assets are not copied

4.

Copy asset from Corporate Book to Tax Book periodically

Tax Book Setup

When a Tax book is defined, it is associated to a Corporate Book. Multiple Tax books can be associated
to a corporate book. Tax book can only be associated with Corporate book but not with other Tax
book.
Whenever a CIP asset is created in Corporate Book, it will be copied to Tax Book automatically. When
the CIP asset is capitalized, the same asset will automatically be capitalized in tax book.

Next you have to decide how your current period, depreciation calendar and Prorate calendar are
required for your Tax Book.

Fig 3: Tax Book setup ( Cont.)

If you have Requirement to generate full year depreciation in tax book irrespective to which month the
asset is being added. Then you just need to setup a prorate calendar with yearly basis.

Also, the full year depreciation should be able to be generated not just at year end but during any
time of the year as fig 4.

Choosing a monthly or yearly depreciation calendar?

Case 1: If your requirement is Yearly calendar

PROS:
1.

Full year depreciation can be run at any time during the year.

1.

Asset retirements cannot be copied to tax book during Periodic Mass Copy as
retirement cannot be performed in period of additions (as now Tax book only got one
period for the year). Asset has to be retired manually in the next year in Tax Book.

2.

Tax Book depreciation is required to rollback whenever periodic mass copy is

performed from Corporate Book to Tax Book.

3.

Asset additions to tax book cannot be tracked monthly.

CONS

Case 2: If your requirement is Monthly calendar

PROS:
1.

Asset retirements can be copied automatically to Tax Book during periodic mass copy.

2.

Assets additions to tax book can be tracked monthly.

3.

Deferred tax journals can be generated if both Corporate and Tax book calendar are
the same.

4.

Monthly calendar is supported in both R11 and R11i.

1.

Full year depreciation can only be generated at end of the year. (Depreciation
projection can still be run to generate full year depreciation)

CONS

What about asset Categories

You can link the asset categories to the tax books that will maintain those assets. Oracle allows you to
exclude, if needed, asset categories from be maintained on the tax books. For each asset category
assign the associated accounts (usually same as corp book) and the depreciation default rules. Oracle
allows for multiple depreciation default rules based on date placed in service. This is to eliminate the
need to define new categories if the depreciation rules change.
Asset Categories which are required for Tax Book will be setup. For those Asset Categories which are
not setup in Tax Book, the assets under them will not be copied to Tax Book.

Initial Mass Copy versus Periodic Mass Copy

Initial Mass Copy - Used ONLY when implementing Tax Books with the first period is the year-end
period. If used for initial implementation, never use again!!!!!
Periodic Mass Copy - Used monthly to copy Additions, Adjustments, and Retirements from the
financial books to the tax books

What is copied during Initial Mass Copy?

It copies all assets added to the Corporate Book before the end of the current tax fiscal year. Retired
Assets are not copied.

When you do, the following financial information of the asset is copied
1.

Cost

2.

Original Cost

3.

Units

4.

Date Placed in Service

5.

Capacity and unit of measure

6.

Salvage Value

Depreciation information comes from the default asset category setup for Tax Book.

Sources Line and Assignment information are shared between Corporate and Tax
Book. No separate source lines can be maintained for Tax Book.

Retired Assets are not copied to Tax Book. It can only be copied via Periodic Mass
Copy.

If we need to handle historical retired assets in Tax Book, we need to set 1st Tax Book
period to an earlier period and from there we can use periodic mass copy to
Retirement Asset across to Tax Book.

If Asset Categories are not setup in Tax Book, they would not be copied to the Tax
Book during Initial or Periodic Mass Copy

To verify the Initial Mass Copy, a Tax Addition Report can be run.

Tax Related Profile Options

Set Profile Option FA:Mass Copy All Cost Adjustments to Yes.

If set to NO this option will not allow cost adjustments to be copied from the corporate book
to the tax book if the cost basis is different between the books.

If set to YES this option will allow the cost adjustment to be copied from the corporate book
to the tax book.