Bruin Company received a $100,000 insurance payment on the death of its company president. The company annually paid $1,000 of non-deductible insurance premiums on the policy. Bruin reported the insurance receipt as income and deducted the premium payments on its books. For ASC 740 purposes, the income and deduction arecharacterized as:

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The insurance receipt is a favorable permanent difference because it is not taxable, but it increases the company's income. The premium payment is an unfavorable permanent difference because it is not deductible, but it decreases the company's income.

Bruin Company Received a $100,000 Insurance Payment on the Death