Corporate Finance
Book-tax reconciliation is the process of aligning a company’s financial accounting records (book income) with its tax reporting records (taxable income). This reconciliation is essential because companies often have different rules for financial reporting compared to tax regulations, resulting in discrepancies that need to be identified and explained. The differences can arise from various factors, including timing differences, permanent differences, and the treatment of certain expenses and revenues under the tax code versus accounting standards.
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