It is important to distinguish between temporary and permanent book-tax differences for which of the following reasons?
A) Temporary book-tax differences will reverse in future years whereas permanent differences will not.
B) Certain corporations are required to disclose book-tax differences as permanent or temporary on their tax returns.
C) Both A and B 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

Distinguishing between temporary and permanent book-tax differences is important because temporary differences will reverse in future years while permanent differences will not. Additionally, certain corporations are required to disclose book-tax differences as permanent or temporary on their tax returns. Therefore, both reasons (A and B) are important and valid for distinguishing between temporary and permanent book-tax differences.

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