Healy, Inc., reports an effective tax rate in its income tax footnote of 6%.The only reconciling item with regard to the hypothetical tax at 21% is a valuation allowance reversal of negative 15%.Which of the following statements is true concerning comparing Healy, Inc.'s effective tax rate with its competitors, all of whom have an effective tax rate between 20 and 24%?

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Healy, Inc.'s effective tax rate of 6% is much lower than the hypothetical tax rate of 21%, but the only reconciling item is a valuation allowance reversal of negative 15%. Therefore, it can be assumed that Healy, Inc. has significant deferred tax assets due to past losses or other tax credits, which require a valuation allowance to be placed against them. As a result, Healy, Inc.'s structural effective tax rate, which takes into account these deferred tax assets and liabilities, is likely closer to its competitors than its reported effective tax rate.