An item that would create a permanent difference in pretax financial and taxable incomes would be

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Permanent differences between pretax financial income and taxable income are caused by items that are included in financial income but never in taxable income, or vice versa. Paying fines for violation of laws is an example of an expense that is deductible for financial reporting purposes but not deductible for tax purposes, creating a permanent difference. Choices A, B, and C typically create temporary differences, as the timing of income or expense recognition differs between tax and financial reporting, but eventually, the amounts recognized will converge over time.

An Item That Would Create a Permanent Difference in Pretax