The company's income is represented by book basis, while its taxable income is represented by tax basis.

The distinction between book basis and tax basis is in the valuation and accounting of assets and liabilities in financial reporting and tax reporting. Here's how it stacks up:

Book Basis

• The value of an asset or liability is determined by accounting principles like GAAP (Generally Accepted Accounting Principles).
• Used to prepare financial statements that provide stakeholders with an accurate view of the company's financial position.
• The calculation of depreciation is done using straight-line methods for accounting purposes.

Tax Basis

Tax rules, which can be dictated by the IRS or local tax authorities, often determine the value of an asset or liability.

Used for determining tax liabilities and calculating taxable income.

For tax purposes, accelerated methods can be used to calculate depreciation, which can result in different values.