Tesla Accounting Move Bolstered Disappointing Profits Report

Tesla Inc.—by pulling an eye-popping $5.9 billion out of its tax valuation allowance—quadrupled its net income compared to the previous quarter in an otherwise disappointing fourth-quarter earnings report.

The electric vehiclemaker made clear, however, this wasn’t a case of cash infusing the bottom line as it reported results to Wall Street Wednesday evening. It was a required and long-awaited accounting maneuver following the pattern of companies like Amazon.com Inc. and others as they moved into profitability. When to pull the trigger in largely emptying the tax allowance reserve, which boosts earnings, boiled down to a judgment call up ...