Non Tax-Deductible Expenses
Suppose we have the following NON-tax-deductible items in a P&L statement:
(1) Stock Based Compensation (SBC) (2) Goodwill Amortization
Even though these items are costs, we don't deduct these items from taxable income and therefore we receive no tax benefits from them.
But now suppose that for some reason we wanted to take these out of our Net Income statement entirely. Since they are non-tax-deductible, wouldn't we just do the following:
Net Income - SBC - Goodwill Amortization
And NOT the following:
Net Income - SBC(1-t) - Goodwill Amortization(1-t)
After all, since we never received tax benefits from these items to begin with, why take out their "tax-affected" amounts rather than their full "pre-tax" amounts?
This site seems to disagree: http://macabacus.com/merger-model/cash-to-gaap-re…
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