DTL from PP&E step-up: how does it affect goodwill and future effective tax rate?

The PP&E step-up creates extra book depreciation. If tax basis does not step up, the temporary difference creates a DTL at closing. That DTL increases goodwill because it is an assumed liability. Over time, as book depreciation exceeds tax depreciation, the DTL reverses and deferred tax expense changes. Cash taxes may be higher than book tax expense during the reversal pattern depending on the schedule.