Corporate Taxation and Accounting
As you may know from your accounting or corporate taxation course, accounting can get complicated when you have to pay a fine for violating a federal statute, such as the Sherman Antitrust Act. According to generally accepted accounting principles, the fine and other expenses related to the violation must be recorded as expenses when calculating the firm's financial accounting income, or book income, but may not be deducted as an expense for tax purposes. Thus, the accountant must file a reconciliation schedule to account for the differences between its book income and tax income.

Source: Anderson et al., Federal Taxation 2006 (Prentice Hall, 2006), pp. 3-38–3-39.