Final answer:
False, Pretax financial income is not determined by the Internal Revenue Code, but by GAAP, for financial reporting purposes, whereas taxable income is determined by the Internal Revenue Code for tax liability calculations.
Step-by-step explanation:
The statement that pretax financial income is determined according to the Internal Revenue Code is false. Pretax financial income is actually determined according to generally accepted accounting principles (GAAP), and it is used for reporting financial results to stakeholders such as shareholders. In contrast, taxable income is computed based on the Internal Revenue Code and is used to calculate the amount of tax that a business or individual owes to the government. Taxable income is the adjusted gross income minus allowable deductions and exemptions. Tax rates vary at different income levels, and sometimes complex aspects like tax credits or the alternative minimum tax can affect one's tax liabilities.