Double-edged Deferral; Financial Accounting  

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[s.n]

Jenis: Article from Bulletin/Magazine
Dalam koleksi: The Economist (http://search.proquest.com/) vol. 401 no. 8763 (Dec. 2011), page 74-75.
Topik: Cash Flow; Accounting; Banks; Deferred Income Taxes; Economic Crisis

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Perpustakaan Pusat (Semanggi) Nomor Panggil: EE29.69 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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When is a corporate-tax cut bad for a corporation? When it would trigger hefty write-downs of peculiar but critical assets, as is the case at some of America's largest banks. The accounting item in question is the deferred-tax asset (DTA). This is a legacy of the financial crisis. America's tax code allows losses amassed during the meltdown (with some restrictions) to be used to offset future tax bills. Since a bank is increasing its future cashflows by reducing expected tax payments, this is recorded as an asset on the balance-sheet. JPMorgan Chase held DTAs of $16 billion at the end of last year, while Bank of America had $27 billion-worth. The undisputed deferred-tax king, however, is Citigroup with slightly more than $50 billion-worth, the largest discretionary accounting item in the company's history. To some, this looks highly optimistic. Mike Mayo, an analyst with CLSA, a broker, has relentlessly questioned Citi's ability to produce enough taxable income to justify the asset and has suggested that it could be overvalued by $10 billion--a view for which he was, for a time, blackballed and badmouthed by the firm's top brass.

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