Deferred Tax Liability

Juggling a relationship between people raised in different religions is often filled with compromises on schedules, practices, and rules. This is a lot like what U.S. citizens have to wade through in reconciling accounting rules and tax rules.

While accounting for the end of a year will show on a balance sheet what income and liabilities are incurred, there are times when accounting rules determine that tax is accrued, but tax rules dictate that the tax is to be paid the following year. This occurs, for example, when a product is sold on an installment plan. The total amount is booked as a deferred tax liability, although tax to be paid is staggered in schedule depending on whether taxes are due quarterly, monthly, or bi-annually.