Your provision,
reconciled to the rate.
Aleq bridges book income to the tax provision, tracks every temporary difference and NOL, and reconciles the effective rate — current with the books, not a quarter behind.
Every point between 21% and your rate.
The rate reconciliation is the first schedule a reviewer turns to. Aleq builds it line by line from the ledger — every driver named, every point traceable.
Every difference, on one schedule.
Stock comp, §174 capitalization, accruals, depreciation, NOLs — each temporary difference creates a deferred tax asset or liability that reverses on its own timeline. Aleq tracks the cumulative book-tax difference and the deferred balance behind it, reconciled to the ledger every period.
| Difference | Cumulative | DTA / (DTL) |
|---|---|---|
| §174 R&D capitalization | $3,600,000 | $900,000 |
| Stock-based compensation | $2,590,000 | $648,000 |
| Accrued compensation | $560,000 | $140,000 |
| NOL carryforward | $5,200,000 | $1,300,000 |
| Depreciation | $(1,400,000) | $(350,000) |
| Valuation allowance | — | $(800,000) |
| Net deferred tax asset | — | $1,838,000 |
A rate change, remeasured at enactment.
When a federal or state rate is enacted, every deferred balance has to be remeasured at the new rate — and the catch-up runs through the provision in the period of enactment. Aleq remeasures the whole schedule the day a law changes and books the adjustment, so the rate reconciliation never drifts.
The valuation allowance is yours to make.
Whether a deferred tax asset will be realized is the central judgment of ASC 740 — and it turns on evidence: cumulative losses against projected income, the carryforward period, your tax-planning strategies. Aleq weighs the positive and negative evidence, drafts the allowance with its reasoning, and holds it for your sign-off.
Three years of cumulative pretax losses are significant negative evidence under ASC 740-10-30. Projected taxable income over the carryforward period supports realizing $1.84M of the gross DTA; the $0.8M against the balance beyond that horizon is reserved until the evidence turns.
Federal, state, and everything against them.
The provision is built from parts — federal, state, international, credits, carryforwards. Aleq computes each and rolls them into one rate.
Book income, bridged to the federal liability.
Aleq starts from pretax book income, applies your permanent and temporary differences, and splits the result into current tax payable and the deferred movement — the federal current and deferred provision, reconciled to the return.
- Current tax on this year's taxable income.
- Deferred the change in net deferred balances.
- Return-to-provision trued up when the return is filed.
Apportioned across every state you touch.
Each state with nexus gets its own apportionment, rate, and modifications. Aleq computes the blended state rate net of the federal benefit and rolls it into the effective rate — no separate workbook per state.
- Apportionment by sales, payroll, and property factors.
- Net of federal state taxes deducted at the federal rate.
- Nexus-aware states added as your footprint grows.
Foreign earnings, GILTI, and the credits against them.
Foreign subsidiaries bring GILTI, Subpart F, and foreign tax credits into the provision. Aleq computes the inclusions, applies the credits, and tracks the rate differential — the international piece, kept current with the group.
- GILTI & Subpart F inclusions computed from foreign results.
- Foreign tax credits applied against the U.S. liability.
- Rate differential tracked in the ETR reconciliation.
R&D credits earned, §174 capitalized, both tracked.
The research credit reduces the current liability while §174 capitalization creates a deferred tax asset that reverses over five years. Aleq computes both from the same engineering spend and carries the interplay in the provision.
- R&D credit reduces current tax, drops the effective rate.
- §174 capitalization creates a DTA, amortized over five years.
- One source both driven from the same qualified spend.
NOLs carried, limited, and tested for realization.
Post-2017 losses carry forward indefinitely but offset only 80% of taxable income, and a Section 382 ownership change can cap their use. Aleq tracks the balance, applies the limitation, and tests realization against projected income.
- 80% limitation applied to post-2017 carryforwards.
- Section 382 ownership-change limits flagged and applied.
- Realization tested before the DTA is carried.
What controllers and auditors ask.
How does it build the provision?
Aleq starts from pretax book income on the ledger, applies your permanent and temporary differences, computes current and deferred tax, and reconciles the effective rate — every driver named and traced back to the source entry.
How is the valuation allowance assessed?
Aleq weighs positive and negative evidence — cumulative losses, projected income, reversal patterns, tax-planning strategies — under the more-likely-than-not standard and drafts the allowance with its reasoning. It's a judgment, so it stops for your sign-off.
Does it handle rate changes and §174?
Yes. Enacted rate changes remeasure every deferred balance in the period of enactment, and §174 capitalization is tracked as a deferred tax asset that amortizes over five years — both flow through the rate reconciliation automatically.
What about state apportionment and international?
Aleq apportions state tax by factor across every state with nexus, computes the blended rate net of federal, and brings GILTI, Subpart F, and foreign tax credits into the provision for foreign subsidiaries.
Can it produce the tax footnote?
Every period exports the provision components, the deferred tax schedule, the rate reconciliation, and the carryforward and valuation-allowance roll-forwards — tied to the ledger and ready for the disclosure.
See your rate reconciled.
Connect the ledger. Watch Aleq bridge book income to the provision, track every deferred, reconcile the effective rate, and draft the valuation allowance — current with the books and ready for the footnote, held for your sign-off.