Intraperiod tax allocation

Intraperiod tax allocation places income tax expense or benefit in the same statement categories as the related pretax items. It does not change total tax or decide whether a pretax item belongs in other comprehensive income (OCI), discontinued operations, or another category.

Keep the pretax amount, tax amount, jurisdiction, period, and sign visible. A tax benefit reduces a pretax loss; it is not an expense with a positive label.

Build the allocation in order

Under the complete model, first determine the tax effect for continuing operations without the items outside that component. Allocate the remaining effect to the other categories under the current rules, then reconcile every category to total tax. A balanced table proves arithmetic; it does not prove the pretax classification or the tax assumptions.

In Chapter 7, the tax effect is supplied. For example, a $200,000 pretax loss and a $50,000 allocated tax benefit produce a $150,000 net loss from discontinued operations. That calculation presents a supplied effect; it does not derive taxable income or current tax payable.

ASC 740-20-45-2 names continuing operations, discontinued operations, OCI, direct equity items, and other categories that can receive tax expense or benefit. ASC 740-20-45-7 explains the continuing-operations computation. Preserve category signs so that a tax benefit is not silently converted into expense.