deferred income tax

Deferred Income Tax

A liability that results from income already earned, is recognized for accounting but not tax purposes purposes, and is recorded on the balance sheet.

Notes:

In other words, the income has been realized, but the tax on that income hasn't.

See also: Balance Sheet, Income Tax, Liability

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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.