| That's definitely not true. I'm not an expert in US tax law, but there are a number of important differences between accounting and tax income/expenses: * Fines, as other people have stated, are usually not deductible. They aren't in Canada, for sure, and they are added back to income (i.e. you're taxed on that amount). * There is usually a big difference between how leases are treated for accounting purposes and for tax purposes * Accounting requires that things like accounts receivable to be measured at the expected value. Accounting generally requires an allowance to be booked as an expense for doubtful accounts, even if you don't know which accounts are doubtful. This is usually done on a basis like, historically 2% of accounts are doubtful, so we'll book that expense. For accounting, that's fine, but for tax purposes only actual bad debts are deductible. * In Canada, capital gains are taxed at 50%, while for accounting purposes 100% of the gain is included in income. * Capital asset purchases are not deductible, but are depreciated instead over time * There's limits on things like meals and entertainment. In Canada, only 50% of them are deductible as it is assumed there is always a personal portion to a meal. So it's not like everything is always deductible, there are many things that income is adjusted for for tax purposes. |