For 2023, its first year of operations, Corning Howell's reconciliation of pretax accounting income to taxable income is as follows:             Pretax accounting income $ 290,000     Permanent difference   (14,900 )       275,100     Temporary difference-depreciation   (20,300 )   Taxable income $ 254,800         Corning's tax rate is 25%. No estimated taxes have been pai

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.