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

Question

Quizplus · Accepted Answer

Temporary differences affect tax calculations over multiple periods as they reverse, while permanent differences do not reverse. Additionally, some corporations must disclose these differences on tax returns.

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