A deferred tax asset or liability is created when a corporation has a difference between the deduction for net income as shown on the income statement and a deduction for taxable net income. The total asset or liability amount is calculated as the taxable amount of that difference. The provision for deferred tax recognizes a future liability arising from past transactions and events. Tax legislation allows the company to defer settlement of the liability for several years.
For example, a deferred tax asset of 100,000 from the previous year could be applied to before-tax income of 250,000 this year, resulting in taxable income of 150,000 (250,000 - 100,000).

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Examples of how to answer the question:
1. A deferred tax asset is when a company pays more in taxes to the IRS than they actually owe. My past company recognized deferred tax when.....

2. A deferred tax asset is when a company pays more in taxes to the IRS than they actually owe. I studied this in my accounting and a scenario would be when a company.....

3. A deferred tax asset is when a company pays more in taxes to the IRS than they actually owe. In my experience, deferred tax recognized by a company because....