Deferred Income Taxes Many companies report different amounts of income on their income statement and on their income tax return. This difference occurs because the definition of income is not the same under GAAP (generally accepted accounting principles) and federal income tax regulations. GAAP requires income tax expense to be calculated on income before taxes on the income statement while the tax return calculates taxes due based on taxable income per the income tax return.
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Generally Accepted Accounting Principles, Income tax