Tax question for accounting homework?

Sunshine Holets: Well, there are 2 very broad events that create differences, and many within the 2 categories.One, is permanent differences. These are differences that are on the tax return that will never be on the book, or vice-versa. Examples: Domestic production activity deduction, dividends received, officer's life insurance, etc.Two, is temporary differences. These are differences that are on either the tax return or book this year, but wont be on the other until next year. Examples: Depreciation, bad debt, amortization, etc.Tax expense is (Income before tax +/- permanent differences) times the tax rate. Taxes payable is the amount of tax you actually have to pay, your liability.To reconcile these two, you have either a deferred tax asset (if your expense is higher than our payable), or a deferred tax liability (if your payable is higher than your expense.)...Show more