Final answer:
The nature of the book-tax difference created by the expense of $50,000 in life insurance coverage premiums for key employees by TrendSetter Inc. is temporary and unfavorable, meaning it will eventually reverse in the future and result in higher tax liabilities in the short term.
Step-by-step explanation:
The nature of the book-tax difference created by the expense of $50,000 in life insurance coverage premiums for key employees by TrendSetter Inc. is temporary; unfavorable.
In terms of book-tax differences, temporary differences are differences in timing between when an expense or income is recognized for financial accounting purposes versus tax accounting purposes. These differences will eventually reverse in the future. Unfavorable differences generally result in higher taxable income for tax purposes compared to financial accounting, which can lead to higher tax liabilities in the short term.