When a company pays taxes that were previously recorded as a deferred tax liability, the temporary difference ________.

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When a company pays taxes that were previously recorded as a deferred tax liability, the temporary difference reverses. This is because the deferred tax liability is an account that is used to record the difference between the taxes that a company owes and the taxes that it has already paid. When a company pays taxes, the deferred tax liability is reduced by the amount of the payment.

When a Company Pays Taxes That Were Previously Recorded as a Deferred