Non-Current Deferred Taxes Liabilities
Future tax obligations from temporary differences, due beyond one year
Non-current deferred tax liabilities (DTLs) represent taxes a company expects to pay in the future due to temporary differences between accounting income and taxable income. The “non-current” label means the expected reversal (and cash tax payment timing) is generally beyond the next 12 months.
What Creates a Deferred Tax Liability
A deferred tax liability typically appears when taxable income is lower today than accounting income due to tax rules that accelerate deductions or delay taxable revenue. Over time, those differences reverse, increasing future taxable income relative to accounting income.
How Analysts Use It
- Assess future tax drag on cash flows when temporary differences reverse.
- Compare DTL levels to PP&E and depreciation policies to infer tax strategy.
- Treat DTLs as a real obligation, but typically not a near-term liquidity risk.
Key Takeaways
Non-current DTLs are future tax obligations created by temporary book-tax differences.
They typically reverse over multiple years and can reflect depreciation and revenue recognition timing.
Non-Current Deferred Taxes Liabilities
Future tax obligations from temporary differences, due beyond one year
Non-current deferred tax liabilities (DTLs) represent taxes a company expects to pay in the future due to temporary differences between accounting income and taxable income. The “non-current” label means the expected reversal (and cash tax payment timing) is generally beyond the next 12 months.
Table of Contents
What Creates a Deferred Tax Liability
A deferred tax liability typically appears when taxable income is lower today than accounting income due to tax rules that accelerate deductions or delay taxable revenue. Over time, those differences reverse, increasing future taxable income relative to accounting income.
How Analysts Use It
- Assess future tax drag on cash flows when temporary differences reverse.
- Compare DTL levels to PP&E and depreciation policies to infer tax strategy.
- Treat DTLs as a real obligation, but typically not a near-term liquidity risk.
Key Takeaways
Non-current DTLs are future tax obligations created by temporary book-tax differences.
They typically reverse over multiple years and can reflect depreciation and revenue recognition timing.
Related Terms
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