Which of the following statements regarding book-tax differences is true?
A) Income excludable for tax purposes usually creates a temporary book-tax difference.
B) Corporations will eventually recognize the same amount of income for book and tax purposes for income-related temporary book-tax differences.
C) Corporations are not required to report book-tax differences on their income tax returns.
D) None of the choices are true.

Question

Quizplus · Accepted Answer

Temporary book-tax differences arise because of timing differences in recognizing income or expenses for book and tax purposes. Eventually, these differences reverse, leading to the same total income being recognized for both book and tax purposes over time.

Which of the Following Statements Regarding Book-Tax Differences Is True