Which of the following describes a permanent difference?
A)A difference that will be corrected in an amended tax return.
B)A difference arising from an uncertain tax position.
C)A fundamental difference in what constitutes revenue or expense for GAAP and tax purposes.
D)A timing difference between the recognition of revenue or expense under GAAP and tax purposes.

Question

Quizplus · Accepted Answer

A permanent difference is a fundamental difference in what constitutes revenue or expense for GAAP (Generally Accepted Accounting Principles) and tax purposes. This means that the difference cannot be reversed or corrected, as it is based on a distinct characteristic of the accounting or tax system. Examples of permanent differences include expenses that are not deductible for tax purposes but are deductible for GAAP purposes, or revenue that is taxable for tax purposes but not recognized as revenue for GAAP purposes.

Which of the Following Describes a Permanent Difference