Accounting EBT and negative tax

**Gustaf** · 05-06-2012, 05:43 AM

Hi,
I have accounting related question.
I am constructing a statement of income and and have now come to EBT=earnings before taxes. When the EBT is positive, you just multiply the EBT with the tax rate and then you get the net earnings for the year. When the EBT is negative the tax that year is set to 0 but then I want to accumulate this negative amount to the next year and add this to the EBT to lower the taxes that year.

Earnings before taxes 100 50 -60 -20 70 100 100 -20 80 10
Net earnings for the year 26 13 0 0 0' 23,4" 26 0 15,6 2,6
100*26% '(-60-20+70 = -10 => 0)
"(-10+100=90, 90*26%=23,4)
Tax 26%

Can someone give me some input on how I can do this in Excel?

Best Regards,
Gustaf

**Russell Dawson** · 05-06-2012, 06:06 AM

Hi Gustaf,

Welcome to the forum.

I've looked at your workbook and it appears that the EBT is going to be a manual input each year. If that is true then could you not simply deduct the previous negative figure when making the entry?

Incidentally, your "Net earnings for the year" figure is wrong as it is calculating the tax. Try this is B4 and copy across.

=IF(B3<0,B3,B3-($B$7*B3))

Regards

Russell

Workbook attached allowing for input of actual earnings in year, hide rows as required.

**Gustaf** · 05-06-2012, 09:21 AM

Thanks for the help, but unfortunately the issue is not solved this easy. I have attached the document once again that shows the results from your formula, the green cells are correct but in the red cells it is not. The problem is that your solution doesn´t include the remaining negative tax in year six (-10+100=90, 90*26%=23,4).

**Russell Dawson** · 05-06-2012, 09:34 AM

Have you looked at my attachment?

**Gustaf** · 05-06-2012, 10:18 AM

I missed that, sorry!
The problem is now solved, thank you!

**Russell Dawson** · 05-06-2012, 11:17 AM

Please remember to mark your thread as solved.

Marking threads "Solved" just got better. Select Thread Tools (on top of your 1st post) -> Mark this thread as Solved. To undo the action, just go back to Thread Tools -> Mark this thread as Unsolved. The older method is still functional, too.