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What is Favorable / Unfavorable Book-Tax Differences? I don't understand when an item is favorable or unfavorable. For example (from my book), Interest income from
What is Favorable / Unfavorable Book-Tax Differences? I don't understand when an item is favorable or unfavorable.
For example (from my book), Interest income from municipal bonds. The income is included in book income, but excluded from taxable income for regular tax purposes... and it is a Favorable difference.
Question: Why is it a favorable difference and how exactly does it effect book and tax income?
Please give detail information that is easy to understand! THANK YOU
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