Income Tax Accounting.

This article focuses on how net operating losses and valuation allowances have an affect on income taxes. In addition, there is a discussion on income tax disclosures. Finally, the article compares and contrasts GAAP and tax code, especially as the two views affect non-profit organizations. A net operating loss occurs when the annual deductions are greater than the taxable income for the year. Studies show that change in the current period, income is a significant determinant of changes in valuation allowance. Changes in valuation allowance have a negative impact on changes in current income.