Under U.S. GAAP, an entity must estimate its ordinary income and the related tax expense or benefit for the full fiscal year (total of expected current and deferred provisions) to calculate its estimated AETR. Ordinary income or loss is income from continuing operations, excluding significant unusual or infrequently occurring items. There are other limited exceptions in which the AETR is not used to compute the income tax provision for the interim period. Amounts and related tax effects, if any, excluded from the overall forecasted AETR are generally accounted for either discretely or through a separate forecasted tax rate. See Chapter 7 for additional guidance.
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This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.