How to record Deferred Tax Assets & Liabilities - IRS Form 1120

A "C" corporation files Form 1120 and pays federal income taxes at the entity level. This is in contrast to a pass-through entity (partnership, S corporation, or DRE) that does not pay taxes directly, because the owners are ultimately responsible for reporting their allocable share of income and paying taxes.

If you prepare financial statements for your "C" corporation, you'll need to record the federal tax provision at year-end.

The provision consists of current and deferred income tax expenses (benefits), and a provision for deferred tax assets, liabilities, and current taxes payable.

In this video, I examine a simple example where a corporation calculates its tax provision with one temporary tax difference.

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