Which of the following causes a permanent difference between taxable income and pretax accounting income?

Question

Quizplus · Accepted Answer

Investment expenses incurred to obtain tax-exempt income causes a permanent difference between taxable income and pretax accounting income because the expenses are deductible for tax purposes but not reflected in the calculation of pretax accounting income. The other options, unrealized gains from recording investments at fair value, rent collected in advance, and prepaid expenses all involve temporary timing differences where the timing of recognizing income or expenses for tax purposes differs from the timing for accounting purposes but eventually reverse.

Which of the Following Causes a Permanent Difference Between Taxable