Final answer:
A deferred tax liability arises when a company recognizes less tax on its financial statements than it owes according to tax laws, due to temporary timing differences. Unrealized gains on investments, prepaid rent revenue, and accelerated depreciation on tax returns could all create deferred tax liabilities.
Step-by-step explanation:
The items that would create a deferred tax liability are:
- Unrealized gains from recording investments at fair value.
- Rent revenue collected in advance.
- Accelerated depreciation on the tax return in excess of depreciation on the income statement.
A deferred tax liability occurs when a company has paid less tax according to tax laws than what is reported on its financial statements. The differences arise due to temporary differences between the book and tax bases of assets and liabilities. For example, when a company uses accelerated depreciation for tax purposes but straight-line depreciation for accounting purposes, the tax expense recognized in the financial statements in the current period is lower than the actual tax paid, resulting in a liability to pay more tax in the future.
Estimated expenses on the income statement not deductible on the tax return would not create a deferred tax liability; instead, it could result in a deferred tax asset if these expenses will be deductible on a future tax return.