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Net Income for Tax Purposes and Taxable Income

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Explain the terms net income for tax purposes and taxable income.

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This solution discusses net income and taxable income.

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Net income for tax purposes: A company's total earnings (or profit). Net income is calculated by taking revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. This number is found on a company's income statement and is an important measure of how profitable the company is over a period of time. The measure is also used to calculate earnings per share. Often referred to as "the bottom line" since net income is ...

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