Module 3: Differences Between Book and Tax Flashcards
1
Q
Temporary differences
A
Items of income/expense that are recognized in one period for book but in a different period for tax
In the long run there is no difference
2
Q
Permanent differences
A
Items of income/expense that are recognized for book but never recognized for tax, or vice versa
3
Q
When is a company required to reconcile book and taxable income on Schedule M-3?
A
If the total assets of the company are $10M or greater
4
Q
Different basis of asset: GAAP vs Tax
A
GAAP = FV Tax = NBV
5
Q
Accrued expenses
A
No deduction until paid for Tax return
6
Q
What items are included in Schedule M-1?
A
Items that are:
- reported as income for book purposes but not for tax purposes
- reported as an expense for book purposes but not for tax purposes
- reported as taxable income for tax purposes but not as income for book purposes
- reported as deductible for tax purposes but not as expense for book purposes