Which of the following statements is true of reserves?

Choose the correct answer.

A.

Only reserves that are specifically identified in the Income Tax Act can be deducted in computing net business income for tax purposes.

B.

Any reserve that can be deducted from GAAP income can also be deducted when computing business income for tax purposes.

C.

Reserves apply only to GAAP accounting and are not deductible in computing business income for tax purposes.

D.

Reserves apply only to calculating business income for tax purposes and are not deductible in computing GAAP income.