Re: Estimated Taxes
You are referring to modeling out NOL (net operating losses). The basic idea is that if a company has, say $100 of NOLs that can be carried forward to deduct against future Taxable Income, this will lower future taxes. For instance, say that $100 NOL company makes $60 next year, and then $120 the ye... You are referring to modeling out NOL (net operating losses). The basic idea is that if a company has, say $100 of NOLs that can be carried forward to deduct against future Taxable Income, this will lower future taxes. For instance, say that $100 NOL company makes $60 next year, and then $120 the year after, it would pay $0 (zero) in taxes next year, since all of the $60 would get removed due to the $100 existing NOL balance, with $40 NOL left. Thus, the year after, Taxable Income gets reduced from $120 to $80 (the remaining $40 NOL offsetting the income) and the company only pays taxes on $80 of income.

Thus, your easiest bet is to set up a reconciliation schedule that goes from Pre-Tax Income (GAAP) minus any use of NOL to get Taxable Income. Actual taxes are paid off Taxable Income. If an NOL is used up, the Deferred Tax Asset on the balance sheet goes down. The dynamic part is that if Pre-Tax Income is negative (made another loss), the NOL balance increases and so does Deferred Tax Assets. Don't forget, DTA is the amount of NOL used or generated x statutory tax rate.

Your reference to differences in D&A (straight line for GAAP and accelerated for tax) is regarding Deferred Tax Liabilities and you are correct in that it is not related to DTA and NOLs!

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Re: Modeling 'Names' used in IB/PE - Question
First step is to understanding Accounting - the "language of finance". Then you need to understand basics of finance and valuation, followed by financial modeling. Go here to learn more about what is required to succeed: First step is to understanding Accounting - the "language of finance". Then you need to understand basics of finance and valuation, followed by financial modeling.
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Re: Merger modeling - Purchase price allocation
No particular reason. We want to say, allocate the book value portion and whatever is left is allocated based on whatever %age we chose.

Re: Estimated Taxes
Yes, correct. Now, if the company generates additional NOLs in your projected periods, then don't forget to increase NOL amount by that amount. Obviously at that point, no cash taxes since no profit (Taxable Income). And DTA up if NOL up.

RE: Complex Trading Comps: Stock comp transition under 123(R)
That footnote is merely informative => adoption of 123R has not yet been complete nor mandatory as of yet; the deadline keeps getting pushed back. In this case, JCP has chosen to adopt 123R and thus, this would be an ongoing expense that will reduce profitability. Because it is ongoing and recurr... That footnote is merely informative => adoption of 123R has not yet been complete nor mandatory as of yet; the deadline keeps getting pushed back. In this case, JCP has chosen to adopt 123R and thus, this would be an ongoing expense that will reduce profitability. Because it is ongoing and recurring in the future, we do not adjust for it. they are merely tellling you that if they DIDN'T adopt 123R, they would have reported $xx higher for comparison purposes. Once the dust finally settles in 123R, every company will have consistency. Read More