Deferred Tax Liability

1. A deferred tax liability is the estimated future tax effect of temporary differences and carryforwards when future taxable income (and thus taxes payable) will be greater than future financial accounting income (and thus income tax expense). All deferred tax liabilities are reported on the balance sheet. Under GAAP, the deferred tax effect attributable to taxable temporary differences, which represent the increase in taxable payable in future years.