Investor Glossary-deferred taxInvestor Glossary-deferred taxInvestor Glossary-deferred taxInvestor Glossary-deferred taxInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Deferred Tax

WordPress
The HTML to link to this page
 

Deferred tax represents a company's liability for taxes owed that is postponed to future periods. Deferred tax is primarily the result of tax law that allows firms to write off expenses faster than they are recognized and thus create a deferred tax liability. For example, under tax law companies can often depreciate fixed assets at a faster rate for tax purposes than the actual use of the asset would dictate. Theoretically, the resulting difference between income under Generally Accepted Accounting Principles and income for tax purposes sets up a deferred tax liability for the apparent taxes owed to the IRS in the future. In actual practice, the deferred tax liability may be postponed indefinitely if the company continues to buy new equipment. Over the past decades, accounting standards for deferred tax have been revised substantially. The rules for deferred tax remain complex and, in some circles, controversial. Some observers argue that deferred tax is merely an accounting fiction and that no deferred tax should be recognized, because the only tax liability is the amount actually owed to the IRS.



Rate this deferred tax definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: required rate of return, ex-dividend, Zero Cost Collar, debt service coverage, quality assurance, class C shares, LIBOR, command economy, stock market close, per diem, VIX, reverse mortgage, 401a, current ratio, implied volatility, labor relations, stock split, deferred tax, APR, cancelled check, 1035 exchange, phantom income, deferred revenue, liquidity ratio, minority interest, in escrow, real GDP, irrevocable trust, average price per share, covered put, inflation, open position, 1031 exchange, Key Rate Duration, margin rate, EBITDA, risk management, retained earnings, 144a, wholly-owned subsidiary, FTSE, dividends payable, limit order, ex-dividend date, balance sheet, FICO score, annual return, option premium, diluted share


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use