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Deferred tax is a notional asset or liability to reflect corporate income taxation on a basis that is the same or more similar to recognition of profits than the taxation treatment. Deferred tax liabilities can arise as a result of corporate taxation treatment of capital expenditure being more rapid than the accounting depreciation treatment ...
You can think of deferred tax assets as a timing issue. For instance, as you keep your company’s books, you normally record purchases, debt, and other costs and liabilities as they occur ...
Say it has $3,000 in deferred tax assets and a tax liability of $10,000. For the sake of example, imagine that the company is being taxed at a rate of 30%, meaning it owes $3,000 in taxes.
On the other hand, some people (primarily business owners) may choose to do the opposite of deferring their tax liabilities by "prepaying" personal income tax that would otherwise be payable in future years. For example, if it is known that tax rates will be increasing in a future tax year, a business owner can reduce his total tax liability by ...
The result is a gap between tax expense computed using income before tax and current tax payable computed using taxable income. This gap is known as deferred tax. If the tax expense exceeds the current tax payable then there is a deferred tax payable; if the current tax payable exceeds the tax expense then there is a deferred tax receivable.
Tax-deferred accounts and tax-exempt accounts have some similarities, but they are used for different purposes. Here's how to know which one is right for you.
A deferred charge is a cost recorded in a later accounting period for its expected future benefit, or to comply with the matching principle, which matches costs with revenue. Deferred charges include costs such as those related to startup activities, obtaining long-term debt , or running major advertising campaigns.
Tax-advantaged retirement accounts where contributions may be tax-deductible, and growth is tax-deferred until withdrawal. Retirement plans such as a 401(k) and 403(b)