Is cash received before revenue recognition taxed?
Suppose you get $10 of cash but the revenue isn't recognized yet. So the $10 goes into deferred revenue. In terms of cash tax accounting, we have +$10 of taxable income. But for book accounting we have no changes to income tax expense as the revenue isn't recognized yet. How does taxation work? Does the company pay taxes on the $10 cash received and then record an increase to DTA or does the company just let the cash sit on the balance sheet and then pay taxes later when the revenue is recognized?
In general, are companies liable for taxes (to the IRS) based off of their cash tax accounting numbers or their book accounting numbers?
Qui vero quasi consectetur excepturi dolor fuga. Assumenda ea velit quod quasi excepturi libero recusandae dolorem.
Officiis placeat ut ducimus illum quidem quo. Minus magnam nam voluptatem. Quia modi temporibus eos et molestiae excepturi consequuntur.
Aut est incidunt nulla facilis eius beatae. Sunt officia voluptatem non fuga et sed ut. Accusamus impedit non adipisci ex deserunt officiis. Id aperiam aperiam aut officia voluptates odio.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...