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Deferred tax assets and liabilities and their tax base... HELP
I have tried too much already to understand this. There is not much time left, but this has become something that I have to understand to defend my brain honor (?)
The conclusion for this DTA and DTL is that if the taxable income (on the tax return) is less than pretax income (on the income statement) a DTL is created. On the contrary, a DTA is created.
I get this logic... If the income before taxes I use for my accounting statement is higher than the income I report to tax authorities, I will have to pay more taxes according to my statement (100 x 40% = 40 vs 80 x 40% = 32). I don't pay them right now, but I know I will have to pay them, so I create a liability called DTL.
If that is correct, then I don't understand some of the books examples... but some others I do.
* If I depreciate an asset slowly in my income but faster in the tax inc, I will have more utilities, more taxes to pay compared to the other one, so I create a DTL: I will have to pay them soon.
* R&D: If I expense 75k this year in my income stmt, but I capitalize most and only expense a part of it in the tax stmnt, I will have to make a DTA, because the income in my statement is lower, I paid less taxes than I "should have", that will reverse in the future.
Okay... WTF... It looks like reading this and thinking hard about it made me understand... erm..
Well, thank you for reading my thoughts... I'm still going to post this because it might be useful to someone. I would like however that you post something additional or what you think about what I just "thought" (I'm right, RIGHT???)