Realization review asks whether recognized deductible differences and carryforwards will produce usable tax benefits. Match evidence to the same jurisdiction, tax character, and expiration period. Give greater weight to evidence that can be verified than to an unsupported forecast created to clear the allowance.
Weigh all available evidence
ASC 740-10-30-17 requires consideration of positive and negative evidence and notes that evidence can have different weight. ASC 740-10-30-18 connects realization to sufficient taxable income of the appropriate character.
A signed profitable backlog may support a forecast, while recent cumulative losses and repeated forecast misses provide contrary evidence. Reversing taxable temporary differences can be a separate source if their timing and character match. Record each item, its date, owner, relevance, and weight. The calculator can apply a supplied allowance conclusion, but it cannot forecast taxable income, approve a tax-planning strategy, or decide how persuasive the evidence is.
State the conclusion by asset source rather than describing the entity as profitable or unprofitable in the abstract.
Put the concept to work
Analyze this concept
- Evaluate supplied positive and negative evidence across the available sources of taxable income without allowing an unsupported forecast to override stronger contrary evidence.
Learning resources
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