You've started working (either public accounting as an auditor or in corporate accounting position). It's year-end for your client (or the company you work for, I'll just use "client"). One of the senior level accounting people, Pat, is looking over things that affect net income. Pat pulls out a copy of the company's tax return which the tax department has prepared.
Pat points to the tax return and says, "Look, according to this official government form, our tax due for this past year is $510,000. But I look at the income statement and it says our income tax provision is $780,000. Why are we recognizing $270,000 more in tax expense than we owe the federal government?
Below draft your response to Pat, making it as clear and concise as possible. You don't have time to pull out any books, so don't include any quotes, just your own explanation of why the difference exists. Why is the income tax provision/expense more than what shows up on the tax return?
Pat points to the tax return and says, "Look, according to this official government form, our tax due for this past year is... View the full answer