A temporary difference between book income and taxable income results when an item of income reflected on the books is never included in taxable income.

Question

Quizplus · Accepted Answer

A temporary difference occurs when an item of income (or expense) is included in book income and taxable income in different periods, but it will ultimately be included in both. If an item is never included in taxable income, it leads to a permanent difference, not a temporary one.

A Temporary Difference Between Book Income and Taxable Income Results