[Ralphie Dos Nachos]

Hey guys I’m getting income taxes down for the most part but I’m just confused with when you know to add the temporary differences or subtract them. I have screenshot attached. in one example in becker, it shows “depreciation in excess of financial statement account” of $25,000 and it’s being subtracted on the taxable income column but in the middle column it is added. And “long-term loss accrual in excess of deductible amount” of $10,000 is added in tax column, but subtracted in middle column. why is it that theyre reversed (added then subtracted, vice versa)

[Recked]

The depreciation in excess – the financials contain depreciation that is lower that what actually appears on the tax return so you need to reduce the bottom line to match.
On the long term loss – the total loss is already recorded in the financials at max, but you can't deduct the max, so you need to add it back in to arrive at proper taxable income.

Make sense? 2 sides of the coin result in opposite treatment

[felixsphone]

I tried out some MCQ but ultimately said forget it. Pick and choose your battles.

[Author]

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