How to review Deferred Tax Assets
Deferred Tax Assets (DTA) result from the disparity between a company's tax liability and its reported tax obligation as per accounting standards. DTA represents a future financial benefit that reduces the company's tax liability in the period it is applied.
Stock-based compensation generates DTA through non-qualified compensation instruments like stock options and restricted stock units.
Carta's DTA for stock-based compensation complies with US GAAP accounting standards, which mandate the use of the accrual method, ensuring that the tax benefit aligns with compensation expense recognition.