Permanent Differences

Permanent differences between the book and tax basis will never reverse; therefore, they will never impact taxable income.

During system setup, implementation, or as part of your on-going tax reporting, you can add and configure accounts for Permanent differences. Permanent differences are national or regional reconciling amounts due to their nondeductability or inclusion for federal, regional, or state purposes.

Examples include fines and penalties, up to 50% of meals and entertainment, certain life insurance proceeds, and so on. These amounts are stored in members of the TRCS Account dimensions, under the following categories:

• TRCS_PermGSTotal (Permanent Differences (GAAP to Stat))
• TRCS_PermSTTotal (Permanent Differences (Stat to Tax))

When reconciling permanent differences at the national level, note that differences can exist when reconciling to a reporting standard or a statutory standard, or when reconciling from a statutory standard to a tax reporting standard. For example, if your reporting standard is IFRS, and the Tax Return basis in the United Kingdom is UK GAAP. Any permanent differences are entered in accounts under the GAAP to Stat parent. Reconciling from UK GAAP to Taxable Income, these permanent differences are entered under the Stat to Tax parent.

Watch this tutorial video for information on configuring Permanent Differences: Configuring Permanent Differences in Tax Reporting.