Corporate Income Taxes Corporations are taxable entities that must pay ncome taxes Because income tax is often a significant amount, it is reported as a special deduction Taxable income is determined according to tax laws which are often different from income before income tax according to GAAp Differences in tax law and gaap create some temporary differences that reverse in later years Temporary differences do not change or reduce the total amount of tax paid, they affect only the timing of when the taxes are paid c12-3C12 - 3 Corporate Income Taxes Corporations are taxable entities that must pay income taxes. Because income tax is often a significant amount, it is reported as a special deduction. Taxable income is determined according to tax laws which are often different from income before income tax according to GAAP. Differences in tax law and GAAP create some temporary differences that reverse in later years. Temporary differences do not change or reduce the total amount of tax paid, they affect only the timing of when the taxes are paid