NetAsset - Tax Engine: Apply Tax Rules
Tax Engine Support is only for MACRS 200 depreciation methods. MACRS 150 and Straight Line depreciation methods cannot be auto-populated via the Tax Engine currently.
Overview
Once the Tax Engine is set up and tax years have been created, tax treatments must be applied to the assets to ensure they are reflected on the alternate tax depreciation schedules. This should be done at the end of the tax year, after the tax years have been successfully configured.
Prerequisites
Before proceeding, ensure the following configurations are completed:
Tax Engine Setup: The tax engine must be properly configured. For detailed instructions, refer to the Tax Engine Setup Guide.
- Asset Type Configuration: Asset types should be set up with the correct tax classifications.
- Depreciation Method Setup: Depreciation methods must be defined with the appropriate tax classifications.
- Permissions Setup: User permissions should be configured to ensure access and management of the tax engine.
- Taxpayer Setup: Taxpayer records must be created, and subsidiaries should be mapped to the appropriate taxpayers.
Tax Year Creation: Tax years must be created within the system. For detailed instructions, refer to the Manage Tax Years Guide.
Step by Step Process
- Navigate to NetAsset > NetAsset Setup > Manage Tax Years>Select "View" on applicable Tax Year
- Once on the correct Tax Year, click the Apply Tax Rules button:
- On the Apply Tax Rules page, select the Taxpayer and Tax Year. The other fields will automatically populate based on the tax year setup:
- Optional: Check the Overwrite Depreciation Method box.
The Overwrite Depreciation Method checkbox is strongly recommended because it ensures any existing or manually entered depreciation methods are overridden and re-evaluated using the correct method, preventing assets from being excluded from tax year calculations. Keeping this box checked helps avoid errors (such as mistakenly applied methods), allows the system to correctly apply conventions like mid-quarter when applicable, and ensures all assets are properly updated.
Be aware though that checking this box will override all currently populated depreciation methods on your asset list, so any customizations or uploads previously done will be overridden.
Best practice is to first apply tax rules with this box checked so the system populates all fields, then make any necessary manual adjustments afterward—ideally waiting until year-end when all assets are in service.
- Once the desired filters have been applied, click Apply Tax Rules:
- Once redirected to the processing screen, Refresh the page periodically until the status shows Complete:
- Once completed, all applicable assets will be displayed below. This page will also indicate whether a depreciation method was reassigned, based on whether the Overwrite Depreciation Method checkbox was selected on the previous screen:
- After the tax year is applied, the Depreciation Method and Tax Information sections on the asset record will be updated accordingly:
- Once the tax rules are applied, the next step is to complete the Section 179 Worksheet. For guidance, refer to the 179 Worksheet article.
Custom Depreciation Method Treatment
When a custom depreciation method is necessary, the user will need to manually upload a CSV file with necessary depreciation method updates to the assets. Adhere to the following steps:
1. Run the Tax Engine so standard alternate tax schedules calculate and post.
2. Export the target assets with Internal IDs from the Asset Register (and Tax Register if needed), filter to just those that should use the custom tax method, and add columns for the alternate schedule Depreciation Method and required parameters.
3. Populate the CSV with the exact custom tax method name or internal ID and any required method parameters; save as CSV.
4. Use the Import Assistant to Update NetAsset Asset records, mapping Internal ID and the alternate schedule method/parameter fields; enable server SuiteScript and run the import, then fix any failures.
5. Regenerate depreciation schedules for the impacted alternate schedule so the new method is applied.
6. Validate on a few assets and via a fresh Tax Register extract to confirm expected tax depreciation.