A Nonqualified Stock Option Will Create a Permanent Book-Tax Difference

question 124

True/False

A nonqualified stock option will create a permanent book-tax difference in a given year if it accrues during the year but is exercised in a later year.
A deductible temporary difference (deferred tax asset) is created in the year the option accrues and is recorded as an expense for book purposes.

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Definitions:

Federal Budget Deficits

The difference between what a government spends and what it collects in taxes over a fiscal year, with deficits indicating more spending than revenue.

Money Supply

The full measure of monetary assets within an economy, involving cash, coins, and balances in checking and savings accounts, at a specified moment.

Expansion

The process of a business or economy growing and increasing its production and activities.

Records

Documents, files, or electronic data that provide evidence of activities, transactions, or decisions, or can refer to vinyl discs used for playing music.