NetAsset - Tax Engine: Manage Tax Years
Overview
Once the tax engine has been set up in NetAsset, a tax year needs to be created so it can then be applied to the assets. It's recommended to do this step at the end of the year because tax law updates may not be released until later in the year.
Create Tax Years
Navigate to NetAsset > NetAsset Setup > Manage Tax Years
This is where tax years will be managed from. To create a new tax year, select New NetAsset Tax Year.
On the next page, there are only three fields required to be filled in. The other fields will be auto-populated.
- Name of the tax year
- Alternate Schedule for the tax year to run on
- Start Date of the tax year.
For more information on setting up Alternate Schedules, see the NetAsset Alternate Schedule Setup and Schedule Generation article. If a company has a fiscal tax year, the Q2, Q3, Q4, and End Dates will adjust automatically to match the NetSuite period settings.
The other tax fields will auto-populate based on these inputs based on the most up-to-date tax laws and limitations. See details on the tax fields below:
- Section 179 Amount - Section 179 is an immediate expense deduction that business owners can take for depreciable assets purchased during the tax year, instead of the asset being capitalized over a period of time. The amount in this field is the maximum deduction amount allowed for the specified tax year. This amount will be automatically updated each year pending updates from lawmakers.
- Section 179 Limitation - The Section 179 Limitation is the limitation placed on total asset purchases for that tax year. This amount is also updated annually per updates from lawmakers.
- Section 168 Percentage - This is also known as Bonus Depreciation. This allows businesses to immediately deduct a large percentage of the purchase price of eligible assets rather than spread the depreciation over the life of the asset. There is no amount limitation on Section 168. The percentage in this field is the max percentage of the asset that can be deducted in the first year of purchase. In this case, the maximum percentage immediately deductible is 80% of the asset purchase price. The default amounts for this field are also updated annually pending updates from lawmakers.
The sublist for Tax Rules will auto populate on the record when created. These rules are set by the system and used to auto-populate the correct real property and personal property depreciation methods to the asset records when the Tax Engine is run.
Tax Rule Support is only for MACRS 200 depreciation methods. Currently custom rules cannot be created and applied.
This means MACRS 150 and Straight Line depreciation methods that need to be applied to assets have to be done through a CSV import and not the Tax Engine.
Luxury Auto limitations are supported by the system. For this rule to take place, an asset will need to be marked as a "Luxury Auto" on the asset record.
Next Steps
Once the Tax Year record is created, it is time to run the Tax Engine. See the NetAsset - Tax Engine: Apply Tax Rules article for a detailed walkthrough of that process.
Once run, the depreciation method, 179 and 168 fields will be populated on each asset record in the Tax Information section.