not exclusively….DT can arise thru accelerated tax allowances, and expected profits/losses in the future (temporary and permanent timing differences).

this type of DT arises on gains/losses in FV of assets which are recycled thru revaluation reserves (capital part of balance sheet rather than p&l) and the DT liab or asset arising should the asset/liability be crystalised and gain/loss taken to p&l and creating a tax charge/credit.

this deal looks like it was designed by tax accountants, not treasury experts. sounds like someone going outside their comfort zone to try and pull a (legal) fast one on the revenue (i.e. reduce tax bill). anyhoo….it fell apart as the assumptions (fx rates stay the same and the interest rates in japan vis a vis london would remain unchanged) failed to hold true for the duration of the transaction.

It is more comforting to believe that I am lead by a knave than a fool.

“… after end-September 2008…there could have been no plausible expectation of profits to shelter”

is not correct.

I explain why here : http://bit.ly/bv75Mx

http://archives.tcm.ie/businesspost/2009/03/01/story39934.asp

Interesting post. And, as always from you, information rich.

FYI Deferred tax is an accounting concept used by accountants to even out the difference between accounting depreciation and tax depreciation. .

So, for example, if a hotel availed of accelerated depreciation for tax purposes to reduce its tax bill in its early years, the accountants would enter a balancing Deferred Tax charge in the Profit & Loss Account to reflect the underlying rate of tax (and to thus average the incidence of the tax charge over the expected life of the project). Thus someone reading the accounts would see an overall tax charge that corresponded to the average tax rate over the full life of the project.

That balancing DT charge would give rise to a corresponding Deferred Tax asset which would be written down in the project’s later years when the actual tax charge rose, the tax depreciation having been fully taken.

The problem for Anglo is that it is highly unlikely that its Deferred Tax assets will ever be realised, as its tax losses must now be absolutely huge.

The translation is that the trade produced a PBT loss but a PAT gain of 17 million. Therefore, the cash position would be positive. However, the lack of taxable profits meant that the tax benefit couldn’t be utilized and it resulted in a 80 million loss.

Think investors buying hotel rooms to buy a tax shelter and then not having the income to shelter.

Think there is a lot worse in Anglo to investigate.

“How can there be unexploded bombs at this stage?”

Think minefield.

Think clusterbomb.

For some odd reason, the description of actions taken by Anglo Irish bank above, reminds me of the taxi trade. As I understand it, the clever blogs delay all their engine re-conditioning and paint work repairs until the end of their tax year. Then bundle it all into one large job, which is used to offset tax liabilities. What you describe at Anglo, must have been one heck of a paint and engine job. I am not sure if we have produced a road-worthy vehicle though. BOH.

Hard to see how we can evade a state resoution regime with the usual massive cuts in public sector numbers/pay, and social welfare.

We are heading into the process with prisons already full, so it’s a serious test for our polity and constitutional order.

“deserves”? Why?

What do you think this is a democracy?

http://www.youtube.com/watch?v=lhVM0HmGado&feature=player_embedded

At 2:28 Hitler declares “I have therefore, refused to come before the people to make cheap promises”

Oldspeak for “hard decisions” and no “by-elections”?

Thank God for Newspeak.

I look forward to the Ministry of Truth (Minitrue) saving the “Irish State” by the introduction of Crimethink.

The “Irish State” must pay the rigged casino derivative gambling debts of the sociopathic vain because the “Irish State” created them.

The €14.6bn of derivatives that NAMA has taken on (on our behalf) pales in significance to the €167bn gross value derivatives on the balance sheet of Anglo Irish Bank at 31 December 2009 (page 79).

So if Anglo “lost” €181m so far how much have they lost since?

1% of €167bn would be (oh let’s just round it up) €2bn.

http://www.angloirishbank.com/About-Us/Reports/Annual_Report_Accounts_2009/Annual_Report_Accounts_PDF.pdf

You think that’s not probable?

I’ll translate it for you (although I know you know it).

It’s called the Yen carry trade.

It was (is) a derivative.

It blew up.

NAMA took on €14,600,000,000 (gross value) of derivatives.

This has just begun.

It will end with the destruction of the “Irish State”.

The book size rose 70% between 2007 and 2008 and another 70% between 2008 and 2009 (chased interest rates up and then chased them down again).

Wan wonders sometimes if Anglo could end up costing more than its assets are worth, never mind adding its liabilities in.

Burn 1.5 bn on St. Stephen’s Green? We should be so lucky. I’m still waiting for Mr. Burgess and Mr. Keenan to apologise for thinking that was somehow “sensational”.