Savvy Trades and Investments

[michael t]

hweb regarding the tax law changes. It depends on the balance of you're deferred tax assests and liabilities. Deferred tax assets and liabilities are setup using the prevailing corporate tax rate at the time (ie 35%). With the reduction in corporate rates to 21%. These assets and liabilities need to be adjusted to the current tax rates.

Thus, if you have a deferred tax liability you will have a gain. if you have a deferred tax asset then you will have a loss.

An example of a deferred tax liability is if you can take accelerated depreciation for tax purposes, but you're required to depreciate that asset over its useful life for GAAP.

An example of a deferred tax asset would occur if you have a GAAP loss during a given period. That loss can be used to offset future income (loss carry forward). Therefore, in the period in which that loss occurs you reduce the loss by the value of the tax loss carry forward and that results in a deferred tax asset.