What's behind ISRG's tax expense volatility?

Intuitive Surgical's (ISRG) tax expense volatility can be attributed to several factors, primarily related to its business model and the nature of its operations. Here are the key reasons:

1. One-Time Tax Benefits from Deferred Tax Asset Re-Measurement: ISRG has recognized one-time tax benefits resulting from the re-measurement of certain deferred tax assets. Deferred tax assets arise when future tax benefits are recognized based on temporary differences between financial reporting and tax reporting. The re-measurement of these assets can lead to fluctuations in tax expense, depending on the magnitude of the adjustments.
2. Geographic Distribution of Operations: ISRG's tax expense is also influenced by its global operations. The company generates revenue from various regions, each with its own tax regimes. Changes in tax laws, regulations, or interpretations in these regions can impact the company's tax liability, leading to volatility in tax expense.

In conclusion, ISRG's tax expense volatility is primarily driven by one-time tax benefits from deferred tax asset re-measurement and the company's global operations, which are subject to varying tax regimes.