Conventional wisdom tells us that the tax cuts will not only add to the economy’s growth trajectory but also be a boon for corporate earnings. Conventional wisdom would be correct in this respect, but we will have to jump through a few hurdles before we reach the ‘promised land’ and those hurdles will start showing up as soon as the big banks start Q4 results on January 12th.

The hurdles I am referring to are the one-time accounting charges that many banks and other companies will have to take in their Q4 earnings reports as a result of the tax law changes. Two areas are particularly notable here – the value of deferred tax assets (DTA) and lowered tax on the ‘deemed’ repatriation of foreign earnings. The deferred tax asset issue, which primarily pertains to prior losses that these companies can use to defray future tax liabilities, will be notable for the major banks.

Most of the major banks incurred big losses during the financial crisis and those losses found a place on the banks’ balance sheets as assets. But the value of these DTAs need now to be lowered given the new 21% corporate tax rate. These DTA adjustments will likely eat up the banks’ entire officially reported accounting earnings.

The issue is expected to be particularly notable at Citigroup (C – Free Report) , which is expected to take a $20 billion one-time charge when it reports Q4 results on January 16th. All of the other major banks and investment banks are expected to take big charges as well, though none of them are in the Citigroup league. JPMorgan (JPM – Free Report) , which reports Q4 results on January 12th, is expected to take a $2 billion charge while Bank of America (BAC – Free Report), reporting on January 17th, is on track to take a $3 billion charge. Goldman Sachs (GS – Free Report) and Morgan Stanley (MS – Free Report) are expected to take $5 billion and $4 billion charges, respectively.