In many mergers and acquisitions (M&A) transactions, the target company has one set of financial information for “book accounting” purposes (or book basis) and another for “tax accounting” purposes (or tax basis). At times, the two sets of books exhibit temporary differences that result in what are called deferred income taxes. In this article, I will explain the sources of deferred income taxes, perform some deferred income tax calculations, and explain how they are relevant to M&A valuations / transactions. [Read more…]
