If a company's deferred tax asset is not reduced by a valuation allowance, the company believes it is more likely than not that:

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A deferred tax asset represents the amounts of taxes paid or carried forward that a company can later use to offset future tax liabilities. Not reducing it by a valuation allowance indicates the company's expectation of generating enough taxable income in the future to utilize these tax benefits fully. This expectation is based on future taxable income, not accounting income or tax rate stability.

If a Company's Deferred Tax Asset Is Not Reduced by a Valuation