Need to clear this once and for all: DTL vs. DTA

Hey everyone! I’m currently recruiting for SA27 and have been struggling to fully grasp the concept of Deferred Tax Assets (DTA) and Deferred Tax Liabilities (DTL). Even ChatGPT sometimes gives conflicting explanations, so any guidance would be super helpful. I’m particularly confused about the definitions of DTA and DTL. I thought DTAs generally represent paying less taxes in the future, while DTLs represent paying more taxes in the future. However, when I think about an asset write-up, it creates a DTL because book depreciation is higher than tax depreciation, resulting in higher taxable income. This seems like you’re paying more taxes now but less in the future, which appears to contradict the idea that a DTL is paying more taxes in the future. Similarly, for DTAs arising from asset write-downs, tax depreciation is higher than book depreciation, so you pay less cash taxes now than the book suggests and more later — again, this seems opposite to the idea that a DTA provides a future tax benefit. Meanwhile, DTAs from NOLs clearly imply a future tax benefit, which aligns with the standard definition, so it feels like the definitions are context-dependent.

I also have a broader question about whether DTAs and DTLs are just temporary timing differences. If they are, paying less now and more later shouldn’t really be “bad” since cash taxes eventually balance out. Or are some DTAs and DTLs permanent, especially in the context of asset purchases versus stock purchases, since there would be no reason for businesses to conduct asset purchases over stock purchases then right? I’d really appreciate any clarification, particularly on whether the definitions differ depending on whether DTAs/DTLs arise from asset write-ups or write-downs, NOLs, or accelerated depreciation, whether there’s a general conceptual definition that covers all cases, and whether DTAs/DTLs are temporary timing differences or permanent. Thank you so much for any help!