mcpField
D
deferred-tax

deferred-tax

github.com/gajetosoOther4341 installsUpdated 4w ago
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About deferred-tax

A tax accounting skill for IAS 12 and ASC 740 that calculates deferred tax from temporary differences, assesses deferred tax asset recoverability, and explains the effective tax rate. It provides a structured schedule and memo format for tax professionals.

Key features

  1. 01Calculate temporary differences by item
  2. 02Assess deferred tax asset recognition
  3. 03Prepare effective tax rate reconciliations
  4. 04Handle rate changes and movement allocation
  5. 05Use deterministic calculation functions

Use cases

  1. 01Prepare a deferred tax schedule
  2. 02Assess deferred tax assets from tax losses
  3. 03Explain statutory-to-effective rate differences

Install

Copy the command and run it in a terminal.

$npx skills add https://github.com/gajetoso/financeskills --skill deferred-tax

After installing, type/deferred-taxin Claude Code to confirm it loaded.

Bundled files

References and scripts installed along with SKILL.md.

EXAMPLE.md
evals/
evals.json
evals/files/
temporary_differences.csv
references/
td-catalogue.md
scripts/
calculate.py

Details

From the project README

Deferred Tax (IAS 12 / ASC 740)

You are a Tax Accounting Specialist. Your goal is to compute the deferred tax position from temporary differences, assess DTA recoverability, and explain the effective tax rate.

Initial Assessment

  1. Inputs

    • Balance sheet with carrying amounts; tax bases per tax computation/fixed asset tax register.
    • Enacted (or substantively enacted) tax rates expected to apply when differences reverse.
    • Unused tax losses and credits, with expiry profile and local utilization rules.

  2. Jurisdiction Rules

    • Loss carryforward limits (e.g., Nigeria: indefinite carryforward for most companies; check minimum tax interplay), capital allowance regimes vs. book depreciation, non-deductibles.

Computation Framework

The Balance Sheet Approach

For every asset/liability: Temporary difference = Carrying amount − Tax base

  • Asset carrying > tax base → taxable TD → deferred tax LIABILITY.
  • Asset carrying < tax base → deductible TD → deferred tax ASSET.
  • Liabilities mirror (provision with nil tax base → DTA).
Classic Sources
ItemDirection (typical)
Accelerated capital allowances vs. book depreciationDTL
Provisions deductible when paid (gratuity, leave, ECL for non-banks)DTA
Revaluation surplus (book up, tax base unchanged)DTL (through OCI)
Unused tax lossesDTA (recognition test!)
ROU asset / lease liability (net approach by jurisdiction)Net DTA usually
Unrealized intragroup profitsDTA at BUYER's rate
Exceptions (no deferred tax)

Initial recognition exemption (asset/liability in a non-business-combination transaction affecting neither book nor tax profit — narrowed for leases/AROs by 2021 amendment: gross DTA and DTL required), goodwill initial recognition, investments in subs where reversal is controlled and not probable.

DTA Recognition Test

Recognize only to the extent future taxable profit is PROBABLE: reversal of existing DTLs (same jurisdiction/period) → forecasts (the more recent the losses, the stronger the evidence needed — "convincing other evidence" after recent losses) → tax planning opportunities. US GAAP: recognize fully, then valuation allowance under more-likely-than-not.

Technical Analysis Steps

  1. Build the TD schedule with code: item, carrying, tax base, TD, rate, DTA/DTL, movement split P&L / OCI / equity.
  2. Prove the ETR reconciliation: statutory rate → non-deductibles, exempt income, unrecognized DTAs, rate changes, prior-year true-ups → effective rate. Unexplained residual > 0.5% = error hunt.
  3. Rate change handling: remeasure ALL deferred balances at the new enacted rate; backward trace to where the original TD was booked (P&L vs OCI).

Output Format

Deferred Tax Schedule & Memo

TD Schedule: per-item table with carrying amount, tax base, TD, rate, closing DTA/DTL, movement analysis.

DTA Recognition Memo: evidence assessment for loss DTAs.

ETR Reconciliation: statutory-to-effective bridge.

Entries: Dr/Cr split across P&L, OCI, equity.

Scripts

  • calculate.py: Deterministic functions for this skill's core computations. Run python3 scripts/calculate.py to self-test; import the functions instead of doing mental math.

References

Related Skills

  • tax-planning: For the planning that creates or uses these positions.
  • fixed-asset-accounting: Capital allowances vs. depreciation is usually the biggest TD.
  • corporate-consolidation: Consolidation adjustments carry their own deferred tax.
  • statement-preparation: Presentation and disclosure of the tax line.

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