bartenis

What About Citigroup and BofA's Billions in Deferred Tax Assets?

"On the tax books, they pay fewer taxes upfront than we see in its public accounts (I know it sounds dodgy but I am sure a tax accountant can explain).... By deferring the tax liability, companies reduce the net present value of the tax charges. the tax books, they pay fewer taxes upfront than we see in its public accounts (I know it sounds dodgy but I am sure a tax accountant can explain). By deferring the tax liability, companies reduce the net present value of the tax charges."

That is wrong.

When you pay more tax than you show on your P and L, you show a deferred tax asset. When you pay less tax than you show on your P and L, you show a deferred tax liability.

In Citi's case, the deferred tax asset--not a deferred tax liability-- means they have already paid out the tax and hope to recover it.

It's hard to say what the recovery prospects are without knowing what Citi did in the first place. They might have bypassed the P and L completely and taken a direct uplift to their equity on some NOLs and and recorded it the uplift as a deferred tax asset.

The writer needs to do some specific research on Citi before publishing such unfounded innuendo.

He does raise a key issue though, to his credit.