Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Type Of Tax-Book Difference - Essay Example

Comments (0) Cite this document
The defined contribution plan is a type of pension plan whereby the employer and the employee both contribute to the fund in a defined manner. Basically, employers are the one who establish the plan and are responsible to make their contributions (Retirement Plan Basics, n.d…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.4% of users find it useful
Type Of Tax-Book Difference
Read TextPreview

Extract of sample "Type Of Tax-Book Difference"

Download file to see previous pages The contribution that can be deductible by the employer must not exceed 25% of employee's total compensation (Green, n.d., retrieved 07.09.06).
The employer receives a tax deduction equaling his contribution in the employee's defined contribution plan. The employees benefit from deduction of contribution from pre-tax salary, which enables them to save taxes and fund the retirement plan with the gross amount. The tax continues to be deferred until the plan is distributed and therefore there remain opportunities for fast investment growth (Building Your Retirement Funds, 2006).
The advantages for defined contribution plan are that this plan allows the employees to save the tax payments until the plan is withdrawn, employees also benefit from employer contribution into the fund, the employees will have the opportunity after the retirement to either receive the entire amount or a series of payment over their entire life etc. The major advantage for employer underlying this plan is that it enables him to evade the risk on investment and also the burden of plan contribution is shared between the employer and the employees. Its major disadvantage is the complexity and strictness of the rules concerning the plan administration (Employer-Sponsored Retirement Plans, 2005). Being the one who establishes the pension plan, an employer is expected to administer it and meet its requirements. The employer will monitor and supervise the investment poured into the plan and review the growth of funds. Moreover, he is also required to provide periodical information to the employees concerning the operation and status of the invested funds (Retirement Plan Basics, n.d. retrieved 08.09.06)
The contribution on the part of employer is limited to a maximum of $40,000 or 25% of the employees' compensation whereas, for the year 2006, the contribution by employees has been defined as limited to 100% of his compensation up to the maximum of $15,000 (Green, n.d., retrieved 07.09.06). The distribution from a defined contributed plan is not allowed whilst the employee is still working. However, when this distribution takes place, it is taxed as an ordinary income. The Internal Revenue Service states the minimum age limit for pension plan distribution as 70-1/2 years, from which the employees should start withdrawing the funds. The distribution is not allowed before the employees reach the age of 59-1/2. If it is done, the investment would be subjected to an early-withdrawal penalty of 10% (Retirement Planning, 2006).
The financial statements of XYZ Corporation should include a statement of net assets available for benefits at the end of the plan year. Moreover, the company also needs to present a statement of changes in net assets available for the benefits at the same time. Also, the GAAP requires the financial statements to be prepared under the accrual basis so as to ease the evaluation of plan assets composition (Defined Contribution Pension Plans, 2005)
Type Of Tax-Book Difference
The discrepancies in the rules and principles set down for financial reporting and tax accounting lead to significant differences in the tax amounts shown in financial statements and the tax returns. These differences are known as the book-tax differences, which are further classified as either temporary or permanent tax differences (Michel, 2005).
Permanent tax difference originates when an income or expense amount needs to be recognized by any of the two methods but not by both of ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Type Of Tax-Book Difference Essay Example | Topics and Well Written Essays - 2250 words”, n.d.)
Type Of Tax-Book Difference Essay Example | Topics and Well Written Essays - 2250 words. Retrieved from
(Type Of Tax-Book Difference Essay Example | Topics and Well Written Essays - 2250 Words)
Type Of Tax-Book Difference Essay Example | Topics and Well Written Essays - 2250 Words.
“Type Of Tax-Book Difference Essay Example | Topics and Well Written Essays - 2250 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Type Of Tax-Book Difference

Book review forthe permanent tax revolt

... distinguishes himself from other economic sociologists, as is evident from his book The Permanent Tax Revolt. The author provides insight into the political and sociological implications of taxation, by exploring the campaign against taxes in the later part of the 20th century. This paper explores Martin’s different ideas on the link between taxation, politics and other sociology aspects, in addition to lessons he has for modern day administrations and society as a whole. In order to comprehend some of Martin’s conceptions about taxation and other regulatory mechanisms, it is imperative to take some facts into account. One of these facts is that tax cuts make up such an invasive aspect of the political landscape in America, that political...
6 Pages(1500 words)Book Report/Review

Difference Between the Tax System - the United States vs Italy

...Difference Between the Tax System - the United States vs. Italy The author’s Proposition Kelly Arthur authored the case, ‘Italian tax mores,’ in which he proposes a difference between the tax system in the United States and that in Italy. He argues that even though both systems are formal and structured, the Italian tax system is based on an assumption that requires negotiations between taxpayers and the country’s revenue authority. Instead of the revenue authority reviewing tax returns and investigating taxpayers who are suspected to have understated their returns, the Italian authority believes that taxpayers always understate their revenues and therefore establishes a benchmark for negotiating for higher tax payables. The author notes...
2 Pages(500 words)Case Study


... Tax Introduction Tax is always a national issue that attracts interest and outcry from the investors, government and citizens in equal measures. Tax, a compulsory payment by citizens to the government, facilitates the development of public projects. However, several controversies affect the collection and administration of taxes across the world. This arises of the exorbitant imposed on people based on their income levels and wealth accumulation. Although taxation should be done on an equal level, government departments are considering a reduction for the middle class and an increase for the wealthy. It is apparent that taxes from the wealthy and income earners help in sustaining the poor though sponsoring public projects. Political...
2 Pages(500 words)Essay


The code of ethics is developed by a professional body such as the ICAEW and often, it is monitored and enforced by the body especially where governmental regulations are of little or no effect. Members are, therefore, to follow the code in order to be in good standing with the institution or organization. Ethics is concerned with operations of the organization; thus to handle client relationships, a code of conduct is required in an institution. The code of conduct refers to a practical document of set standards and principles that govern client relationships with staff members in the organization.
The Institute of Chartered Accountants in England and Wales (ICAEW) defines a professional code of conduct that accountants are...
9 Pages(2250 words)Essay

Fundamental Difference between a Partnership, a LLP and a Private Limited Company

An unqualified form of partnership places the entire burden of business liability on the partners of the firm. On the other Limited Liability Partnership (LLP) and a Private Limited Company do not impose as much liability as the Partnership does.  

An LLP is almost similar to a standard form of a partnership without unlimited liabilities on the partners. Partners’ liabilities are differently prescribed in that liability caused by any error of one partner need not affect the other partners. State registration is required but some of the states stipulate that partners should take liability insurance or has adequate assets to meet likely claims. This is very much applicable to firms of professionals like account...
13 Pages(3250 words)Term Paper

Analysis of Isaiah 61:1-11 Book

The focus of this exposition is the book of Isaiah chapter 61: 1-11.  The King James Version of the Bible is used as well as the Judaica Press Complete Tanach Yeshayahu Chapter 61.  The Jewish Publication Society Tanach (1917) is also used.  Lastly, Rashi’s commentary is referred to as well.  It is worthy of mention that both the Jewish and Christian perspectives are explored here and that, in the true essence of research, one is not favored over the other.  Isaiah Ben Amoz was considered a prophet in his time. He was known to predict the deliverance of Jerusalem from the Assyrians. Jerusalem was freed from the control of the Assyrians in 701 B.C. which added to his credibility as a prophet. The whol...
13 Pages(3250 words)Research Proposal

The Purpose of Speech in the Book of Chuang Tzu

We are not able to see the world in its entirety and get separated from Tao, unable to find the way. This position is explained in Chapter II, demonstrating how Dao, the great law, makes things equal. Chapters IV, XI, XIII, and XXII add much to our understanding of the essence of speech. The philosopher also dwells on the significance of silence. In Chapter XXVII the author demonstrates that properly organized speech of the wise serves the great purpose of human education and enlightening. Speech is the major instrument of human communication and cognition, must be used properly.

Speech is very powerful. With its help, humans can narrate events, and draw pictures so vivid and great that listeners are astonished. With th...
10 Pages(2500 words)Term Paper

The Role Played by Cultural Difference in International Politics

The discourse of multiculturalism is inconsistent. To its advantages belongs preservation of cultural pluralism, recognition, and protection of the diverse minority, refusal from xenophobia, chauvinism, and racial prejudices. Lacks are shown in ethnisation of social relations, the institutionalization of cultural distinctions, ignoring the liberal principle of priority of the rights of an individual.

The culture of any nation, defining its spiritual uniqueness, expressing its creative power and abilities, simultaneously is a property of all mankind. “According to official multiculturalism, no individual is forced to retain his or her culture, but all cultures are granted a universal right to celebrate and even to...
9 Pages(2250 words)Essay

Calculation of Income Tax

The calculations for the capital gains tax are shown in the appendix. From the calculations, it may be observed that it is advisable to sell off the business building before 05th April 2008 as you can avail of the indexation allowance and taper relief which are no more available. It may be noted that the indexation and taper relief are the allowanced granted by the government to provide for the increase in the asset value due to inflation (Chris Horne). In case you decide to sell the property after 05th April 2008 you may have to pay a higher CGT of 18,000. However in the case of the personal paintings since they have been acquired only in the year 2005 they do not stand eligible for any allowances and the capital gains will simpl...
6 Pages(1500 words)Case Study

The Difference between Prudential and Protective Regulations

Governments attempt to regulate and organize different fields of life in their respective countries. This need for regulation has been created for a number of reasons. One prominent reason may be attributed to the fact that the government may assess a certain industry having a significant impact on the economy thereby embarking on a regulation endeavor. By these regulations, the government will be able to protect its markets from failure, leading to unwanted deficiencies such as monopoly, windfall profits, anti-competitive behavior, and predatory pricing.

One of the most important types of regulations that endeavor to protect consumers and restore confidence in the financial markets as being genuine is the regulation...

9 Pages(2250 words)Research Paper

Analysis of the Book of Job

The job was a man of God who possessed insurmountable faith, so much so that God systematically relinquished from Job all that is good and important, to render a more cleansed and righteous Job with renewed faith. Job discusses many plague-like incidents that all seemed to happen to Job and his family. One of the most powerfully portrayed issues in Job was divine justice.

In the case of the severity of Job’s trials, it is beyond the term understatement to say that what Job went through simply for a test, was supreme overkill. The stipulation placed by God was that he was to be turned over to Satan but just not killed. It seems that God should already know if Job is truly a faithful follower as opposed to putting h...
6 Pages(1500 words)Book Report/Review

Functions of Type III Interferons

With the body of knowledge on interferons increasing, so did the understanding of their use in regulating the response of the immune system of the human body get enhanced. In modern medicine the interferons have provided a novel means to therapeutic intervention in many clinical applications.
According to Ramos-Bello and Ramos-Niembro 2008, (1) p.55, interferons have been defined as “a group of substances belonging to the cytokine family indispensable for the normal functioning of the immune system.” The interferons were derived from their pleiotropic functions and became the first set of biological products employed in the treatment of diseases, which has led to the interferons being described as pleiotropic cyto...
6 Pages(1500 words)Coursework

Can One Person Make a Difference in an Organization

Each individual has something to contribute but at times one person can make a difference to an organization.
Technology today has made it possible to retain and conserve knowledge and transmit it to other people in an organization. The knowledge that has been created by a single individual can be a powerful weapon when retained, transmitted, disseminated and applied. According to Nonaka, new knowledge begins with an individual (Chaston, Badger & Sadler-Smith, 1999). When the new knowledge is generated it is merged with the existing knowledge and new knowledge from other sources and provides the basis for new products and processes. Thus knowledge has been classified into two categories – explicit and tacit. Explici...
6 Pages(1500 words)Case Study

Pathophysiological Processes Involved in Type Two Diabetes

Changes in lifestyle and behavior, in particular, sedentary jobs combined with lack of exercise and an increase in disposable income combined with lower food prices, have resulted in a veritable explosion of type 2 diabetes. Left untreated, type 2 diabetes can lead to a series of complications and illnesses and a high incidence of premature morbidity. However, over-rich nutrition and the resulting obesity are not the only risk factors as there are different levels of susceptibility to type 2 diabetes in different ethnic groups.

According to statistics released by the World Health Organization (WHO), currently, 180 million people worldwide have diabetes, with 2.9 million deaths per year occurring due to complications cau...
9 Pages(2250 words)Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Type Of Tax-Book Difference for FREE!

Contact Us