The difference between the tax base of an asset or liability and its reported amount on the statement of financial position is called a

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The difference between the tax base of an asset or liability and its reported amount on the statement of financial position is a temporary difference. This is because the difference may eventually reverse, resulting in taxable or deductible amounts in the future. Permanent differences, on the other hand, are differences between the financial statement and tax reporting that will never reverse and, therefore, do not give rise to deferred tax liabilities or assets. "Current difference" is not a commonly used term in accounting, and "future income tax expense" is the result of recognizing and measuring the deferred tax impacts of temporary differences.

The Difference Between the Tax Base of an Asset or Liability