Under FAS 109,a deferred tax asset results when the book (financial)basis of an item exceeds its tax basis (e.g.,MACRS over straight-line depreciation).

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The definition provided is that of a deferred tax liability. A deferred tax asset results when the book (financial)basis of an item is less than its tax basis (e.g.,accrual for product warranty expense).

Under FAS 109,a Deferred Tax Asset Results When the Book