i am very intrigued that a good portion of the DTA write-up is listed as a current asset, which i take to mean it is pretty much in the bag. Hope and prayer are not good analytical tools.
It is available for use in the present period, but will not necessarily be used. Having a deferred tax asset listed as current wasn't what I found odd with the taxes. It was lack of tax liabilities either current or long term. Most real companies have both deferred tax assets and deferred tax liabilities instead of hiding behind a netting process. Not Novastar.
The disclosure doesn't disclose very much, in keeping with management's long demonstrated preferences. You will note state income taxes are disclosed nowhere.
Note 11. Income Taxes
The Company had a deferred tax asset of $286.4 million as of December 31, 2011 which had been reduced by a full valuation allowance. After evaluating positive and negative evidence available as of March 31, 2012, the Company has determined that it is more likely than not that it will realize a portion of its deferred tax assets. The Company's analysis was significantly influenced by the fact that it reached three years of cumulative income in the first quarter of 2012. The Company has therefore released a portion of its valuation allowance and has recognized a net deferred tax asset of approximately $63.1 million on its balance sheet as of March 31, 2012. The Company recorded an income tax benefit of $63.1 million during the three months ended March 31, 2012 for the portion of the change in valuation allowance arising from expected realization of deferred tax assets in future years. The Company will continue to assess the need for a valuation allowance.
The Company has considered all available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income, among other items, in determining whether a full or partial release of our valuation allowance is required. Our estimates require the exercise of significant judgment. The Company based our estimate of realizable deferred tax assets in part on business plans and expectations about future outcomes. In the event that the actual results differ from these estimates in future periods, the Company may need to adjust the valuation allowance which could materially impact our financial position and results of operation.
The change in unrealized gain on mortgage securities – available-for-sale in the condensed consolidated statements of comprehensive income is not shown net of taxes as the Company has a valuation allowance recorded on a portion of its deferred income taxes. |
