It is important to distinguish between temporary and permanent book-tax differences for which of the following reasons?
A)Temporary book-tax differences will reverse in future years whereas permanent differences will not.
B)Certain corporations are required to disclose book-tax differences as permanent or temporary on their tax returns.
C)Both "Temporary book-tax differences will reverse in future years whereas permanent differences will not." and "Certain corporations are required to disclose book-tax differences as permanent or temporary on their tax returns." are the reasons.
D)Neither "Temporary book-tax differences will reverse in future years whereas permanent differences will not." nor "Certain corporations are required to disclose book-tax differences as permanent or temporary on their tax returns." is the reason.

Question

Quizplus · Accepted Answer

Both reasons given are important for distinguishing between temporary and permanent book-tax differences. Understanding that temporary differences will reverse in future years and permanent differences will not allows for proper planning and forecasting. Additionally, certain corporations are required to disclose these differences on their tax returns, so it is important to distinguish between temporary and permanent differences for compliance and transparency purposes.

It Is Important to Distinguish Between Temporary and Permanent Book-Tax