The taxpayer should use the technique of ASC 740-30 (APB 23) income deferral only when the tax rates that apply to the subsidiary are less than those of the applicable U.S. income tax rate.

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ASC 740-30 (APB 23) income deferral is used to defer the recognition of taxable income earned by a foreign subsidiary until it is repatriated to the domestic parent company. This technique should only be used when the tax rates in the subsidiary's country are lower than the tax rates in the United States. This is because the deferral benefits will be maximized when the tax rates in the subsidiary's country are lower, and the deferral may not be advantageous if the tax rates in the United States are lower.

The Taxpayer Should Use the Technique of ASC 740-30 (APB