A goodwill that is not deductible for tax purposes- that is, accounting for goodwill is carried out on the basis that deferred tax liabilities (DTL) arising in association with it are not deductible. Amortization for non-tax deductible goodwill (for financial reporting) usually gives rise to an effective tax rate reconciling item (which may constitute a disadvantageous permanent difference). Typically, whether the goodwill is deductible for tax purposes, i.e., the selection between deductible and non-deductible tax treatment, will define the goodwill accounting- particularly formation of provisions for income taxes.
January 31, 2025
