C. Revenues are reported on the tax return now, but on the income statement later create a deferred tax asset due to its respective treatment on the books versus the tax return.
This is because when a company reports revenues on a tax return before they are reported on the income statement, it creates a deferred tax asset. A deferred tax asset is a tax benefit that a company can use to reduce its tax liability in the future.
This type of benefit is created when a company reports revenue on a tax return before it is reported on the income statement because the revenue is taxed before it is reported as income on the income statement. When the revenue is reported on the income statement, the company can use the deferred tax asset to reduce the amount of taxes owed. This is beneficial because it allows the company to pay less in taxes.
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