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 ?
The deferred income tax liability shows a corresponding decrease to $1062, a reduction of 76% as compared to the level prior to the impairment.
Prior to the impairment, the maximum deferred income tax liability was $4889 in year 4.
For example, the user could access the accounting, auditing and disclosure requirements for deferred income taxes, deferred income tax liability or Financial Accounting Standards Board Statement no.
Accounting for deferred income tax liability has been the subject of serious controversy for a number of years.