The differences between book and tax income can be temporary or permanent differences. Which of the of the following statements is correct? If a temporary tax difference is initially recorded as a deferred tax asset, it will be recorded as a deferred liability when it is reversed. An example of a temporary difference is non-taxable municipal bond interest. A company can decide which differences are permanent and which are temporary. Permanent differences do not result in deferred tax assets or deferred tax liabilities.