deferred income tax

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Deferred Income Tax

On a balance sheet, a tax that a company will owe on its income, but that has not yet been assessed. Because of differences between tax regulations and the Generally Accepted Accounting Principles, income may be recognized on a balance sheet for accounting purposes, but not for tax purposes. However, that income will eventually be recognized for tax purposes and income tax will then be assessed. This tax is called deferred income tax, and is recorded as a liability on the balance sheet.

deferred income tax

A liability created by income recognized for accounting purposes but not for tax purposes. The liability recognizes future taxes due when earned income is later reported for tax purposes. Use of accelerated depreciation for reporting to the Internal Revenue Service and straight-line depreciation for reporting to stockholders is one of the major reasons a firm includes deferred income taxes as a liability on its balance sheet.
References in periodicals archive ?
Reasons: The deferred income tax liability for the book and income tax basis difference in goodwill and trademarks as a result of an acquisition had been incorrectly offset against deferred income tax assets in considering the size of the required valuation allowance.
The deferred income tax liability shows a corresponding decrease to $1062, a reduction of 76% as compared to the level prior to the impairment.
The Fund accrues a deferred income tax liability balance, at the currently effective statutory U.
IHOP had previously recorded in its consolidated financial statements the expected federal and state deferred income tax liability.
During the preparation of the 2004 income tax provision, the Company identified a prior period error relating to the overstatement of a deferred income tax liability.
Deferred income tax liability as of the end of 2004 will decrease by $45 million while retained earnings for the same period will fall by nearly $74 million.