Permanent vs. Taxable and Deductible Temporary Differences between Book and Tax

Summary

This practice note focuses on a corporate taxpayer who files a corporate tax return using Form 1120. The term company is used throughout this practice note, and a company is defined as an entity that produce, sells goods, or provides services. This practice note provides an overview of permanent versus taxable and deductible temporary differences between book, and tax. This note also serves as an introduction to U.S. Generally Accepted Accounting Principles (U.S. GAAP), accounting periods, the most common differences between book and tax accounting, the difference between statutory and effective tax rates, and the reconciliation formula.