Given that OID amort (usually included in interest expense) is book deductible, but not tax deductible, I would imagine this creates a DTL at inception.
Can someone please weigh in if this is correct?
Nothing online even mentions the creation of deferred taxes when discussing OID, except for one article on WallStreetPrep which says it creates a DTA (but I think that's wrong). A sanity check would really help me out here.
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Edit: Double post
It's deductible as interest, so no.
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OIDs can technically be seen as implied interest paid upfront. They don’t create any intertemporary differences between your book and cash taxes, so no DTA / DTL is created.
To clarify, your thought process is correct; however, OID amortization is also deductible for cash taxes purposes (see IRS Publication 1212)
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