Valuation Allowance
The concept of a valuation allowance is not an “all or nothing” approach.
- Creation of or adjustment to the valuation allowance affects the tax expense calculated for the period.
If your situation is relatively simple (few differences, constant rates, etc.) calculation is relatively straightforward. If your situation is complex (many differences, changes in rates, classified B/S) scheduling may be necessary to correctly calculate and classify deferred taxes.