Differences between business income for tax purposes and business income as determined under GAAP can be either permanent or temporary.

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Differences between business income for tax purposes and business income as determined under GAAP can be either permanent or temporary. Permanent differences are caused by items that are included in one calculation but not in the other, such as tax-exempt income or non-deductible expenses. Temporary differences arise when an item is recognized differently for tax purposes than it is for financial reporting purposes, but ultimately the timing of the recognition will reconcile over time.

Differences Between Business Income for Tax Purposes and Business Income