Tesla Tax Reserve Buffer Drew SEC Scrutiny Ahead of Earnings (1)

Before Tesla Inc. bolstered its year-end profits by pulling an eye-popping $5.9 billion out of its tax valuation allowance, US market regulators had been scrutinizing the electric vehicle maker’s padded accounting reserve for months, correspondence released Friday shows.

Staff at the Securities and Exchange Commission first prodded Tesla about its income tax accounting in September, asking to justify why it was sitting on such a massive reserve when the company had been profitable. Companies beef up tax valuation reserves during lean times and, under US accounting rules, are supposed to reduce them when they have proof they’ll turn a ...