Exemption of Assets from Taxation 

Use

Some assets are tax-exempt for the first few years after you acquire them. For example, an asset may be tax-exempt for the first three years, and liable to tax as of the fourth year. We recommend that you handle these assets as follows, using the Reason for Manual Valuation field in the asset master record.

Activities

Customizing

Create a reason for manual valuation, 000, in Customizing for Financial Accounting (FI), by choosing Asset Accounting  ® Special Valuation  ® Net Worth Tax  ® Create Reasons for Manual Depreciation.

In the standard system, the Reason for Manual Valuation field is not displayed in the asset master record. Activate it in Customizing for FI, by choosing Asset Accounting  ® Special Valuation  ® Net Worth Tax  ® Define Screen Layout. Set the field group rule 53 (Reason for Manual Valuation) to Optional.

Master Data

In the master records of tax-exempt assets, on the Net Worth Tax tab, enter 000 in the Reason for Man. Val. field.

When the asset becomes liable for taxation, delete this entry. For example, if an asset is tax-exempt for three years and then becomes liable for taxation as of the fourth year, delete the entry in this field at the beginning of the fourth year.

Periodic Processing

When you run the Property Tax Report, it sets the tax-exempt assets’ tax book values and their tax evaluation amounts to zero. The report also excludes these assets from the determination of the decided value.