A permanent difference with respect to taxes is a difference that affects the tax records but not the accounting records,or vice versa.

Question

Quizplus · Accepted Answer

A permanent difference affects only the tax records and does not affect the accounting records. This is because permanent differences arise due to differences in the tax rules and accounting principles. However, temporary differences affect both tax and accounting records, and they are eventually reversed, resulting in the same amount of taxable income in both records.

A Permanent Difference with Respect to Taxes Is a Difference