SANDHILL corporation reported the following results for its first three years of operations  2020 income (before income taxes). $300,000 2021 loss (before income taxes) $2,700,000 2022 income (before income taxes)  $3,000,000 There were temporary differences during these three years. Assume that Sandhill elects to use carryforward provision and not the carryback provision. What income (loss) is reported in 2021?

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.