Income Tax Accounting Financial reporting and tax reporting summary: Income before tax $300,000 x 40% rate $120,000 Taxable income $100,000 x 40% rate $40,000 Date Description Debit Credit 1st Yr. Income Tax Expense 120.000 Income Tax Payable 40.000 Deferred Income Tax Payable 80.000 The income tax expense is deducted from the income before tax reported on the income statement c12-7C12 - 7 Date Description Debit Credit Income Tax Accounting Financial reporting and tax reporting summary: Income before tax $300,000 x 40% rate = $120,000 Taxable income $100,000 x 40% rate = $40,000 Income Tax Expense 120,000 Income Tax Payable 40,000 Deferred Income Tax Payable 80,000 The income tax expense is deducted from the income before tax reported on the income statement. 1st Yr