Deferred income taxes arise because the taxable income of a corporation can differ from the net income reported on its financial statements.

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Deferred income taxes occur when there is a difference between a corporation's taxable income and the net income reported in its financial statements, resulting in temporary tax liabilities or assets. This difference can arise due to differences in the accounting methods used for financial reporting and tax purposes or due to timing differences between when revenues and expenses are recognized for tax and financial reporting purposes.

Deferred Income Taxes Arise Because the Taxable Income of a Corporation