Accounting Dictionary

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Tax Base

Definition: Under international financial reporting standards, the tax base of an asset is the amount that will be deductible for tax purposes against any taxable economic benefits generated by the asset. If the economic benefits are nontaxable, then an asset's tax base equals its carrying amount.

The tax base of a liability is its carrying amount minus any amount related to that liability that will be deductible for tax purposes in the future. If an entity receives revenue in advance, its tax base for the resulting liability will be its carrying amount, less any amount that will not be taxable in the future.