A corporation generally will report a favorable, temporary book-tax difference when it deducts a charitable contribution carryover.

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When a corporation deducts a charitable contribution carryover on its tax return, it creates a temporary book-tax difference because the deduction reduces the corporation's taxable income for tax purposes but does not reduce its financial statement income. This creates a temporary timing difference between the corporation's book income and tax income. However, this temporary book-tax difference is favorable for the corporation because it reduces its current tax liability.

A Corporation Generally Will Report a Favorable, Temporary Book-Tax Difference